Canada gains more jobs than expected in Feb; wage growth slows

By Thomson Reuters Mar 8, 2024 | 7:52 AM

By Promit Mukherjee and Ismail Shakil

OTTAWA (Reuters) – Canada’s economy added a net 40,700 jobs in February, more than double the expected gain, though wage growth slowed for a second consecutive month and the jobless rate ticked up to 5.8%, data showed on Friday.

Analysts polled by Reuters had forecast a net gain of 20,000 jobs and for the unemployment rate to edge up to 5.8% from 5.7% in January. The unemployment rate has been steady at that level for three of the past four months, Statistics Canada said.

February’s job gains were driven by full-time work, where 70,600 positions were added, more than offseting the 29,900 jobs shed in part-time work.

Still, population growth continued to outpace employment growth and led to a 0.1% fall in the employment rate – or the proportion of the population aged 15 and older who are employed. It was the fifth consecutive monthly decline, making it the longest period of consecutive decreases since April 2009.

The annual growth in the average hourly wage of permanent employees – a figure closely watched by the central bank – slowed to 4.9% from 5.3% in January. It was the second consecutive month of wage deceleration and the lowest rate since June, further signs that Canada’s labor market is moderating.

Employment growth lagging the rate of population growth has allowed supply to catch up with demand, as the Bank of Canada (BoC) tries to cool inflation to a 2% target.

The BoC wants sustained evidence that inflation is heading towards that target before it considers lowering interest rates.

Money markets reflect around an 85% chance of a rate cut in June and fully price a 25 basis point cut in July. Those bets haven’t changed much from before the jobs report.

The Canadian dollar was trading 0.2% higher at 1.3435 to the U.S. dollar, or 74.43 U.S. cents, after touching its strongest intraday level since Feb. 12 at 1.3427.

On Wednesday, the BoC kept its key overnight rate unchanged at 5% for a fifth consecutive time, citing persistent underlying pressures to inflation.

Employment in goods sector decreased by a net 6,300 jobs, mainly in manufacturing and agriculture, while services sector gained a net 46,900 jobs, led by accommodation and food services and professional, scientific and technical services.

(Additional reporting by Dale Smith; editing by Christina Fincher)