Canada’s unemployment rate dropped to 6.6% last month, its lowest level in more than two years, as fewer people were looking for work, Statistics Canada (StatsCan) reported on Friday.
The report was the latest in a line of stronger-than-expected data. Several economists hailed the numbers as further evidence that Canada’s economy is on the mend from the oil price shock of recent years, although at least one questioned the survey’s findings of a massive swing toward full-time employment at the expense of part-time jobs.
The decline of 0.2 percentage points from the previous month brought the rate down to a number not seen since January 2015.
The agency’s February employment survey indicated the national labour market added 15,300 jobs overall last month, higher than analyst expectations.
Economists had projected a gain of 2,500 jobs and the unemployment rate to stay at 6.8%, according to Thomson Reuters.
“The underlying economy continues to gain steam,” says Benjamin Reitzes, senior economist with Bank of Montreal, in a note to analysts. “One more piece of evidence that the Canadian economy has turned the corner.”
The StatsCan report found most of the February job gains came from full-time work, offset by a decline in the number of people working part-time.
It said an estimated 105,000 more people found full-time employment last month while part-time positions dropped by 90,000. That was in contrast to the January labour market survey, which showed a surge in part-time work.
“I find this hard to believe in terms of the details,” says Derek Holt, head of markets economics with Bank of Nova Scotia’s economics department, noting that the increase in full-time jobs would mark the strongest gain in almost 11 years while the part-time drop would represent the biggest decline since StatisCan began its labour force survey in 1976.
While the monthly employment numbers are typically volatile, StatsCan said that in the 12 months to February, Canada saw a net gain of 288,000 jobs with most of the increase coming in the last six months of 2016.
Friday’s jobs report has taken the likelihood of a Bank of Canada interest rate cut completely off the table, says Reitzes.
But the central bank is also unlikely to raise rates anytime soon, adds Brian DePratto, senior economist with Toronto-Dominion Bank’s economics department.
“The Canadian economy is seeing a return to sustained healthy growth, which should absorb remaining slack and lead to eventual inflationary pressures,” DePratto says. “This process will take time, however, and the Bank of Canada will want to continue supporting it and will likely be reluctant to raise rates until well into next year.”
The central bank, in holding the line on its 0.5% trend-setting interest rate target earlier this month, cited “significant uncertainties” in Canada’s economy as it weighed whether to move that rate up or down.
Job numbers south of the border also came in stronger in February. The U.S. Bureau of Labor Statistics reported Friday that nonfarm payrolls increased by 235,000 from January while the U.S. national unemployment rate was 4.7%, a decline of 0.1%.
Much of the increased job activity in Canada last month was seen in the West, with British Columbia, Saskatchewan and Manitoba all seeing gains.
In contrast, fewer people were working in Nova Scotia and Newfoundland and Labrador while employment was little changed in the other five provinces.
Women in the 25–54 age bracket saw more work, marking the third monthly increase in that category. Men in the same age range saw employment holding steady in February after a notable increase the previous month.
Employment among youth aged 15–24 was little changed both in February and on a year-over-year basis. But with fewer young people seeking jobs, their unemployment rated declined by 0.9 percentage points to 12.4%.