EconoFACTS

March 10, 2023 | 09:14

Canadian Jobs: Drama-Free, but Rock Solid

Economist

Douglas Porter , CFA

Chief Economist and Managing Director
Economics

Douglas Porter has over 30 years of experience ana... (Read more)

Douglas Porter , CFA

Chief Economist and Managing Director
Economics

Douglas Porter has over 30 years of experience ana... (Read more)

Canadian employment rose by a middle-of-the-road 21,800 in February, above consensus and staying firm even after the massive 150,000 jump in January. While somewhat dull in comparison to the blow-out in the prior month, the details of the report were solid, and the important point is that there is no backing down from the early-year strength. The latest gains were all in full-time positions (+31.1k), and thus aggregate hours worked churned out a solid +0.6% advance, leaving them on track for a 4% annualized rise in all of Q1—far above consensus expectations of around 1% GDP growth in the quarter. Complicating matters for the BoC, the unemployment rate stayed tight at 5.0%, and average hourly wages popped back up to a 5.4% y/y pace (from 4.5%). That's even above the 4% to 5% range referenced by the BoC In this week's Statement.

By Sector: The breadth of the job gains last month weren't great, with as many industries posting losses as gains. The big positives were in health care (15k), public admin (10k), utilities (7k) and manufacturing (7k). That was partially offset by pullbacks in management (-11k), finance & real estate (-8k), and a dip in construction (-2k).

By Region: Job gains were more evenly distributed by province, with 8 of the 10 in the green. Ontario's gain (+16K) was almost precisely offset by Quebec's loss (-16k), while all other provinces (save Nova Scotia) reported decent gains. Jobless rates cascaded lower in much of Atlantic Canada, with New Brunswick reporting its second lowest rate on record (down 1.2 ppts to 6.3%), and Newfoundland back in single digits for only the second time ever (9.9%). Even with an uptick last month, Quebec's 4.1% jobless rate remains the lowest in Canada (Sasky is next at 4.3%).

Bottom Line: As a standalone report, there is nothing particularly remarkable about today's employment update, besides perhaps the snapback in wages. But arriving on the heels of the January jobs jamboree, this result is far too strong for the BoC's comfort. There simply is no sign that the labour market is succumbing whatsoever to the rapid-fire tightening of the past year. We won't adjust our call on the BoC just yet, but the economy is likely just one wrong turn on the inflation front away from the Bank flipping back into rate-hiking mode.

Table 1 - Canada — Employment

(change in thousands)

Source: BMO Economics, Haver Analytics