OTTAWA (Reuters) - Canada’s economy lost 28,900 jobs in April, Statistics Canada said on Friday in a report that revealed across-the-board weakness in a labor market that is stalled and has been adding jobs at a more sluggish pace than in the United States.
The report suggests economic growth has not been gathering the speed that was expected in the second quarter and that business confidence is still shaky. That reinforces the view that the Bank of Canada is unlikely to raise its main interest rate until the second half of 2015.
“It suggests that maybe we’re starting the second quarter on a softer footing than initially believed. There’s really no silver lining in this report,” said Mazen Issa, senior strategist at TD Securities.
The biggest losses were in the accommodation and food services industries, followed by finance, insurance, real estate and leasing. All the job losses were in full-time positions and the majority were in the private sector.
Market players had forecast, on average, 12,000 net new jobs in April following a big gain of 42,900 in March.
The jobless rate was unchanged at 6.9 percent because fewer people participated in the labor force, Statscan said. The participation rate was 66.1 percent, compared with 66.2 percent in March.
Analysts warned against doomsday predictions based on one month’s data, suggesting the delayed arrival of spring weather might have led some employers to postpone hiring plans. Also, the outsized loss of 32,000 jobs in the province of Quebec could be an anomaly that reverses itself in May, they argued.
Still, Statscan’s numbers show an employment picture that has changed little since last August. The six-month moving average for employment growth stood at 2,300 in April, down from 9,700 in March. In the year to April, the number of people working rose by 0.8 percent, or 149,000.
“You have to take a three-month trend to see what is happening. Yes, job growth has slowed in Canada, but it is not the disaster that the April report suggests,” said Sal Guatieri, senior economist at BMO Capital Markets.
The Canadian dollar weakened to C$1.0886 to the greenback, or 91.86 U.S. cents, after the data was released. That was weaker than Thursday’s close of C$1.0823, or 92.40 U.S. cents. The currency hit a low of C$1.0902 immediately after the release.
Economic growth in Canada pulled ahead of that in the United States and others countries as it recovered quickly from the 2008-09 global recession. But that gap is now narrowing as exports - the lifeblood of Canada’s economy - aren’t rising as hoped despite a strengthening U.S. market and the depreciation of the Canadian dollar.
Bank of Canada Governor Stephen Poloz, however, has said he has become more hopeful that exports will bounce back, saying that new central bank research on non-energy exports have given him a better understanding of expected performance.
Adjusted to U.S. methods for comparison purposes, the Canadian unemployment rate was down 0.2 percentage points in the year to 6.0 percent, compared with a 1.2 point decrease in the U.S. unemployment rate to 6.3 percent.
The Canadian employment rate slipped 0.3 percentage points to 62.1 percent versus a 0.3 point increase to 58.9 percent in the United States.
Wages of permanent employees, an indicator of inflation closely watched by the central bank, rose just 1.6 percent in the year to April, down from 2.4 percent in March.
“It certainly weighs toward keeping the Bank of Canada on the sidelines and refraining from raising interest rates,” Guatieri said.
The Bank of Canada has held its main interest rate unchanged since September 2010 and repeated last month that its stance is “neutral”, meaning its next move could be either a hike or a cut.
Additional reporting by Alex Paterson in Ottawa and Euan Rocha in Toronto; Editing by Chizu Nomiyama; and Peter Galloway