Canada's huge job gains stir rate hike talk

Fri May 11, 2012 11:42am EDT
 
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By Randall Palmer

OTTAWA (Reuters) - Defying forecasts of a hiring slowdown, Canada added far more jobs than expected in April and marked the biggest two-month employment gain in more than 30 years, raising expectations that the Bank of Canada will raise interest rates in the coming year.

April registered 58,200 new jobs, mostly full time, after a whopping gain of 82,300 in March, Statistics Canada said on Friday. The back-to-back jump of 140,500 jobs was the biggest since a 143,300 rise in January and February of 1981.

With a Canadian population one-ninth the size of that of the United States, it would be as if the U.S. economy had added about 1.3 million jobs in two months. U.S. non-farm payrolls rose by a total of 269,000 in March and April.

"It's a solid report, showing very surprising strength for the second straight month in Canadian jobs," said Sal Guatieri, senior economist at BMO Capital Markets. "It certainly raises the possibility of the Bank of Canada moving on interest rates sooner rather than later."

But Guatieri, who expects a rate hike in January 2013, said the economy probably is not growing as fast as the robust jobs figures suggest.

Despite all the new jobs, the unemployment rate actually rose to 7.3 percent from 7.2 percent in March because more people were looking for work.

Economists surveyed by Reuters had, on average, forecast the job market would create just 7,000 new jobs after March's jump. However, the median forecast for the unemployment rate proved correct at 7.3 percent.

The details of the job picture also showed strength. All the new posts were in the private sector and 43,900 of them were full time. The number of employees rose by 66,600, while those in the often-softer category of self-employed fell.   Continued...