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Canada adds jobs in February as wage growth slows for second month in a row

Published 2024-03-08, 10:24 a/m
© Reuters. FILE PHOTO: A view of an illustration outside a wood flooring sales office next to an employment agency in Toronto, Ontario, Canada October 8, 2021. REUTERS/Chris Helgren/File Photo

By Promit Mukherjee and Ismail Shakil

OTTAWA (Reuters) -Canada's economy added a net 40,700 jobs in February, double the expected gain, data showed on Friday, and wage growth slowed for a second consecutive month as the central bank continues to hold interest rates at a 22-year high.

However, the jobless rate ticked up to 5.8%, Statistics Canada said.

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, Statscan said.

"There is still evidence from today's data that labor market conditions are loosening, but only very gradually and not in a way that demands an imminent reduction in interest rates," said Andrew Grantham, a senior economist with CIBC (TSX:CM) Capital Markets, adding he expects first rate cut in June.

The Bank of Canada on Wednesday said it was too early to consider lowering borrowing rates. It has kept its key overnight rate unchanged at 5% at the past five policy-setting meetings.

"Wage growth, which had been running at 4 or 5% ... there's certainly some early signs that it's beginning to ease," Governor Tiff Macklem told a news conference on Wednesday, adding that it was still not enough to warrant an early rate cut.

The annual growth in the average hourly wages of permanent employees - a figure tracked by the central bank - slowed to 4.9% from 5.3% in January, reaching its lowest level since June.

Though Canada added jobs, the employment rate fell slightly in part because of population growth, Statscan said.

It was the fifth consecutive monthly decline in employment rate, making it the longest period of consecutive decreases since April 2009, Statscan said.

The US job market report, which came at the same time as Canada's, showed that its economy also absorbed more jobs than expected by analysts as its economy continued to outperform global peers. However, its unemployment rate rose.

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

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 did not change much after the release of the jobs report.

© Reuters. FILE PHOTO: A view of an illustration outside a wood flooring sales office next to an employment agency in Toronto, Ontario, Canada October 8, 2021. REUTERS/Chris Helgren/File Photo

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.

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

 

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