OTTAWA (Reuters) - Canadian job growth dropped off in March after two blockbuster months, but the figures -- and the fact that the new jobs were part-time ones -- pointed to a softening jobs market and a slowing economy.
The number of jobs rose by 14,600 in March, due entirely to the creation of part-time positions, Statistics Canada said on Friday. A surge in entrants to the labor market pushed the jobless rate up to 6.0 percent from 5.8 percent in February.
Most analysts predict the Bank of Canada will cut its key interest rate by 50 basis points on April 22 as economic weakness in the United States spills over to Canada, and the figures did nothing to change that expectation.
“Canada’s employment growth is expected to falter and the unemployment rate to rise further in the months ahead. We continue to expect Bank of Canada to cut the policy rate by 50 basis points,” said Ted Carmichael of JP Morgan Securities.
Few analysts had expected a repeat of the strong growth at the start of the year -- the economy added 43,300 jobs in February and 46,400 in January.
“After some incredibly strong employment growth figures over the last year or two, we think that employment growth in Canada is due to slow, and today’s report may have been the beginning of a softer trend,” said Jacqui Douglas, an economics strategist at TD Securities.
Statscan said the increase in the jobless rate was caused by a surge in entrants to the labor market but also noted the participation rate had risen to a record 68.0 percent. Traders had predicted a jobless rate of 5.9 percent.
The Canadian dollar sank to a session low of C$1.0083 to the U.S. dollar, or 99.18 U.S. cents, from C$1.0052, or 99.48 U.S. cents, before the data were released. It recovered to C$1.0020 to the U.S. dollar, or 99.80 U.S. cents, after the release of weaken than expected U.S. jobs figures.
The figures showed that 34,200 jobs were added in Canada in March. Full-time employment dropped by 19,600 and the hard-pressed manufacturing sector shed 9,400 positions for a year-on-year loss of 113,300 jobs.
“The Bank of Canada will likely remain wary that with the growing indications that the U.S. economy declined in the first half of this year, the weakening in Canadian employment growth could extend into subsequent months,” said George Davis, chief foreign exchange technical analyst at RBC Capital Markets.
Not everyone was convinced there were many signs of real stress outside the manufacturing sector.
“Employment is still up 1.9 percent year-on-year, normally a solid increase. There’s no conclusive evidence here of either a big slowdown in activity or a continued upswing in wages, so this report will make little impression on the next ... rate decision,” said Doug Porter of BMO Capital Markets.
Employment gains were posted in transportation, warehousing and natural resources, with losses in information, culture and recreation. The hourly wages of permanent full-time employees grew by 4.7 percent from March 2007, well above the 1.8 percent overall inflation rate.
Additional reporting by John McCrank in Toronto