OTTAWA — After months of stagnant or even falling employment, Canada’s economy has just had its biggest surge since before the last recession — adding 82,300 workers to the labour force in March.
That’s six times more than the previous seven months combined and was the biggest monthly jump since September 2008, just before the Canadian economy was hit with fallout from a U.S. credit crisis that sparked a global recession.
March’s gain, almost all in full-time work, dropped the unemployment rate two-tenths of a point to 7.2 per cent.
The report was unexpectedly positive and the Canadian dollar, which had been down before Statistics Canada released the number, jumped 0.29 cent to 100.65 cents US shortly after the announcement. The loonie rose even higher as the day progressed, reaching 100.85 cents US in late morning trade.
The details from Statistics Canada’s jobs report were as impressive as the headline.
Hours worked rose 0.5 per cent and average hourly wages surged to 2.6 per cent annualized from 2.0, the fastest pace in a year.
Private sector gains outpaced the government sector two-to-one, and the weaker self-employment category only comprised about one-quarter of the new net jobs. As well, the vast majority of the new jobs came in heavily populated regions, with Ontario picking up 46,000 and Quebec 36,000 — both provinces with struggling economies.
“I think it really does show that the job market has broken out of it’s funk,” said Bank of Montreal deputy chief economist Douglas Porter.
It could “change the tone of the debate” about when the Bank of Canada will move up its influential interest rates, Porter said, although he said it’s unlikely the central bank will move quickly.
The Bank of Canada has expressed concern about the potential risks from prolonged low interest rates, including high levels of consumer borrowing that has pushed up Canadian household debt to record levels.
On the other hand, the central bank has said the recovery from the 2008-9 recession has been slow due to various factors including the high value of Canada’s dollar — which makes exports more difficult — and economic trouble in major traditional markets such as the United States and Europe.
More recently, some observers have warned that the recent rise in gasoline prices could put a brake on Canadian economic growth as businesses and consumers put more money into fuel and less into other spending.
Porter warned Canadians not to expect the kinds of job gains experienced in March going forward, noting that unusually warm weather last month might have pushed forward some seasonal work, and that the public sector saw a 21,000 increase, unusual at a time of government austerity.
Both the federal and Ontario governments introduced budgets last week with spending restraint as a focus. The Conservative government in Ottawa pledged to cut about 19,200 public servants and the Liberal government at Queen’s Park is asking provincial employees to accept wage freezes.
“Nevertheless, this is a very encouraging report that clearly shows the domestic economy still has some underlying momentum — much needed, in a time of government restraint,” Porter said.
Canada has not had a month of significant job gains since last September, but that performance was largely due to seasonal hiring in the education field, and was reversed the following month.
There may be more reason for optimism this time around.
The United States has experienced three consecutive months of 200,000-plus increases in employment and Bank of Canada governor Mark Carney has begun citing “firmer” underlying conditions in Canada as a result of the U.S. improvement and abating fears over Europe’s debt problems.
TD Bank’s Sonya Gulati noted that despite the indication of volatility in the March number, it is likely playing catch-up for what had been a stalled labour market dating back to last summer.
Smoothing out the data, employment in Canada is growing pretty well along expectations — between 10,000 and 20,000 a month — she said, adding the rest of the year will likely be in the upper end of the range.
“With this gradual pace of hiring, the unemployment rate should not deviate too far from its current levels,” she said.
The new jobs were broadly spread through industries.
There were significant increases in health care and social assistance, up 32,000; information, culture and recreation, an increase of 28,000; and public administration, 15,000.
Employment in the natural resources sector rose, and there were even modest gains in manufacturing and construction, two industries that have suffered recent set-backs.
The key outlier was education services, which dropped 25,000, reversing increases the past two months.
Another welcome change from recent trends was that employment for young workers, those in the 15-to-24 age category, rose sharply by about 39,000. That dropped the unemployment rate in the group by 0.8 points to 13.9 per cent.
Last month’s addition brings total net job creation to almost 200,000 over the past 12 months.
Regionally, all four Atlantic provinces and British Columbia had a decrease in employment in March, although the losses were relatively minor.