Canada Jobs Market Holds Steady Ahead of Virus Spread

(Bloomberg) -- Canada’s job market strengthened for a third-straight month, a reassuring sign within the domestic economy even as the spread of coronavirus threatens future growth.

Canadian employment grew by 30,300 in February, beating economist expectations for 11,000 new jobs, Statistics Canada said Friday in Ottawa. All of the gains were concentrated in full-time work and the private sector.

At the same time, the unemployment rate ticked up slightly to a still low 5.6% in the month, from 5.5% in January. Annual wage gains decelerated slightly to 4.3% from 4.4% in the prior month. Hours worked rose 2.3% on the year and 1.2% on the month.

The relatively solid report comes amid virus-related turmoil that has gripped markets in the past couple of weeks. On Wednesday, the Bank of Canada acted to safeguard the economy against heightening virus concerns by lowering interest rates by 50 basis points to stimulate consumption. The move was part of a broader easing trend among global central banks.

The Canadian dollar briefly pared losses after the report, and was trading little changed at C$1.3419 against its U.S. counterpart at 8:52 a.m. Toronto time.

“Canada ended the last of the pre-virus jobs reports with a flourish, as a strong month for employment and a healthy wage gain showed that everything was fine in the labor market,” Avery Shenfeld, chief economist at CIBC, said in a note. “We won’t really see the major impacts of the coronavirus for a couple of months, so markets will look past all of these numbers.”

Key Insights

• A third month of a decent jobs gains backs up the view from the Bank of Canada that the labor market remains a bright spot in the domestic economy even while business investment, productivity and exports remain weak. However, as coronavirus concerns intensified at the end of February and into March, there’s a good chance the labor market will weaken in the coming months if business and consumer confidence weaken further
• The February report may not reflect the full extent of the virus-related slowdown, given it’s based on a household survey only for the week of Feb. 9 to Feb. 15, which is before the height of the turmoil in global markets. While the data is generally healthy, the gains of recent months aren’t likely to last if coronavirus concerns continue to seep into broader consumer and business confidence
• The report showed a moderate increase in employment but still reflects a deceleration in job growth from the monster employment gains seen in the first half of 2020

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• British Columbia and Ontario posted the biggest job losses; they also saw the unemployment rate rise notably as more people searched for work, the report stated
• Quebec posted notable job gains of 20,000 continuing a trend of solid growth in employment in the province for several months, and the unemployment rate fell to 4.5%, the lowest since at least 1976. Gains were mostly among young people aged 15 to 24, the agency said
• Rail blockades during February caused layoffs within the transportation sector but these were not evident from the data in the report; however, the teacher’s strike in Ontario in February did result in reduced hours worked for the educational services sector
• The majority of job gains were concentrated in the services-producing sector which rose 24,600; the goods-producing sector added 5,600 jobs
• All of the job gains in February were concentrated among full-time work and the private sector; the public-sector shed 600 jobs and part-time employment declined by 7,300 jobs

--With assistance from Erik Hertzberg.

To contact the reporter on this story: Shelly Hagan in Ottawa at shagan9@bloomberg.net

To contact the editors responsible for this story: Theophilos Argitis at targitis@bloomberg.net, Chris Fournier, Stephen Wicary

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