Canada job numbers hotter than expected in ‘bad news’ for BoC

The gain was more than four times the average economist estimate

A Costco wholesale location worker collects shopping carts in Ottawa on Monday, July 11, 2022. THE CANADIAN PRESS/Sean Kilpatrick
Statistics Canada reported Canadian employers added 34,700 jobs in March, surpassing economist expectations. THE CANADIAN PRESS/Sean Kilpatrick

Canadian employers continued to create jobs in March, with 34,700 jobs added, Statistics Canada said on Thursday.

The headline number from the Labour Force Survey was more than four times higher than the consensus of a 7,500 gain from economists surveyed by Bloomberg, and marked an acceleration in growth compared to February.

While that was good news for Canadian workers, it spells “bad news for the Bank of Canada,” Royce Mendes, managing director and head of macro strategy at Desjardins, said in a note.

The transportation and warehousing, business support services, and real estate sectors were the top gainers while the construction industry lost jobs.

The unemployment rate held steady for a fourth straight month at 5.0 per cent.

Meanwhile, average wage growth remained strong at 5.3 per cent year-over-year, a tick lower than February.

The report shows economic momentum since the start of the year continued into March, Mendes said.

“That said, although the data are inconsistent with the Bank of Canada’s goal of cooling the labour market and the economy more broadly, the numbers shouldn’t change the modus operandi of the Bank of Canada,” he added.

Mendes still expects the central bank to hold on rates in its next meeting on April 12.

The job market, and in particular, wage growth, have been a thorn in the Bank of Canada’s side, repeatedly holding up more than expected against rate hikes meant to slow the economy.

Since September, the labour market has generally trended upward with 383,000 more people employed over that time, according to Statistics Canada.

“While the Bank of Canada is expected to remain on hold next week, the still low unemployment rate and strong wage growth will likely see policymakers maintaining a bias towards further hikes, rather than hinting at the cuts markets have been pricing in, within the statement,” Andrew Grantham, senior economist at CIBC Capital Markets, said in a note to clients.

The central bank has predicted the labour market will slow in the coming months as higher borrowing costs ripple through the economy.

Michelle Zadikian is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @m_zadikian.

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