By Ketki Saxena
Investing.com – The Canadian labour market blew past expectations in March once again, with the domestic economy adding 34,700 jobs in the month - compared to expectations for 7,500 positions forecast by economists.
The unemployment rate meanwhile held steady at 5%, while wages grew 5.3% year over year.
March marks the fourth straight month of gains in the Canadian labour market, which continue to remain historically tight despite higher interest rates trickling through the economy.
However, the full effect of interest rates has yet to be felt in the economy, and recent Bank of Canada have shown that businesses anticipate sales to slow - likely to have a knock-on effect on employment.
Nathan Janzen, Assistant Chief Economist at RBC (TSX:RY) notes that despite labour market headline strength “early cracks have been forming under the surface - even as hiring has remained very strong, job openings have been edging lower and the BoC's Q1 Business Outlook Survey showed the intensity of labour shortages easing.”
Jansen further warns that despite its current strength “the labour market itself is a lagging economic indicator and headwinds from aggressive rate hikes over the last year continue to build.”
In terms of what’s next for the Bank of Canada, Janzen expects that the BOC will continue to hold the overnight rate at 4.5% next week, as it waits for more economic data to take a call on whether its “conditional pause” is a permanent one.