Canada’s economy got a job-creation lift last month that nudged the unemployment rate back down to match its all-time low of 5.8% — but a closer look reveals a rush of part-time work and a big decline in full-time positions.
Statistics Canada’s (StatsCan) latest labour force survey, released Friday, showed the country lost 39,300 full-time jobs and generated 54,700 part-time positions in February. It also found the job gains were driven by an increase of 50,300 in public-sector jobs.
The national unemployment rate slipped to 5.8% from 5.9% in January to match its lowest level since the agency started measuring it in 1976. The jobless rate has only fallen to 5.8% twice during that time, once in 2007 and again in December.
Looking back, the job market added 282,500 positions for a 1.5% expansion over the past 12 months — with growth entirely due to full-time work. Canada’s year-over-year job creation last month showed signs of moderation after the number climbed above 420,000 positions in December.
Experts, including the Bank of Canada (BoC), have been expecting the job market’s red-hot pace from last year to cool, along with the rest of the economy as it approaches full capacity.
Manulife Asset Management Ltd. senior economist Frances Donald said there’s very little in the jobs report that will rock the boat — and she added that in itself is very important.
“These jobs numbers fit quite well into the Bank of Canada’s cautiously optimistic Canadian narrative,” Donald said. “The Canadian job market, just like the broader economy, is decelerating somewhat, but it’s coming back down to earth in what we might consider a more-reasonable pace of gains with fewer distortions.”
Donald underlined a couple of key indicators from the jobs report: the upward trend for hours worked, which suggests continued strong demand for labour in the economy, and average wage growth that’s still hovering around 3%, which suggests more Canadians are benefiting from the healthier market.
Average hourly wage growth, which is under close watch by the BoC ahead of interest rate decisions, stayed solid at 3.1%. In January, wage growth hit 3.3% following a steady flow of monthly increases after the indicator bottomed out at 0.5% last April.
“At 3.1% in February, wage growth posted a fourth consecutive month above its longer-term average of 2.6%,” Sherry Cooper, chief economist with Dominion Lending Centres, wrote in a research note.
Cooper said the February reading won’t set off inflation warnings for the BoC, which noted this week that wage growth is still below what it considers a normal level for an economy without labour market slack.
“This suggests the bank will maintain its cautious stance,” she said.
Earlier this week, the central bank highlighted wage growth as one of the key data points that it will scrutinize ahead of future interest rate decisions. The BoC kept its trend-setting rate at 1.25% on Wednesday after introducing three hikes since last summer.
The central bank has remained cautiously upbeat about the economy and has said more interest rate hikes will likely be necessary over time, despite mounting protectionist and competitiveness unknowns that have clouded the economic outlook. It said future decisions will continue to be guided by incoming data, such as the economy’s sensitivity to higher rates, the evolution of economic capacity and changes to wage growth and inflation.
BoC deputy governor Timothy Lane said in a speech Thursday that although the future is subject to notable uncertainties, trends over the past few quarters have been broad-based across regions and sectors, and “quite encouraging.”
Last month’s job growth, while small enough to be statistically insignificant, represents an improvement over the January report that showed a drop of 88,000 positions for the labour force’s steepest one-month drop in nine years.
By industry, the goods-producing sector shed 10,400 positions last month, led by a decline of 16,500 jobs in manufacturing, while the services industries added 25,900 jobs.
The survey also said the number of paid employee jobs increased last month by 58,800 positions, compared with a decrease in self-employed positions of 43,300.
By region, New Brunswick saw the biggest percentage increase — a boost of 1.5% compared with January — as it gained 5,100 jobs. Ontario added 15,700 positions, which was a 0.2% boost compared with January.