(April 6 – 12:40 ET) – Canadian employment climbed by almost 30,000 new jobs in March, overcoming the drop that occurred in February. The other surprise was that the pack was led by construction and resource industries. The unemployment rate went up nonetheless, a fact attributed to growth in the labour force.

The implication of the report leaves economists split on rate cuts. While all agree a cut is in the cards for April 17, some favour 25 basis points, and others foresee a more aggressive 50 bps move. “The trend is still softening, but it’s not straight downhill,” says BMO Nesbitt Burns. “The solid report increases the chances that the Bank of Canada will be content to trim rates 25 bps on April 17.”

CIBC World Markets agrees. “While meaningful hurdles to Canada’s growth outlook remain, today’s stronger than expected employment report signals that the domestic economy remains reluctant to give up the ghost. This report is the most important piece of data the Bank of Canada will see before their April 17 rate decision, and looks to give Governor Dodge enough ammunition to defend a modest 25 bps easing step.”

However, CIBC suggests this will just forestall inevitable future cuts, with the Fed likely to cut rates another half point before the Bank’s subsequent meeting.

RBC DS Global Markets is expecting the Bank to get the jump on the Fed. “Although today’s report was better than expected, it does remains consistent with slower economic growth. The report does not alter our view that the Bank will likely pursue a precautionary 50 bps cut on April 17.”
-IE Staff