Job growth in Canada rose above expectations-report
2023.03.10 12:19
Job growth in Canada rose above expectations-report
By Ray Johnson
Budrigannews.com – According to data released on Friday, the Canadian economy exceeded expectations in February by adding 21,800 jobs, putting pressure on the central bank to consider another rate hike after declaring that it wanted to end its year-long tightening campaign.
Experts overviewed by Reuters had estimate a net increase of 10,000 positions after January’s incredible 150,000 increment. Economists had predicted that the unemployment rate would rise to 5.1% in February, but it remained at 5.0%.
In February, the average hourly wage for permanent employees increased by 5.4% year-over-year, up from 4.5 percent in January.
According to Royce Mendes, head of macro strategy at Desjardins, “evidence is accumulating that the labor market is not following the Bank of Canada’s plan for the economy,” pointing specifically to the acceleration of wage growth.
After seeing these numbers, “markets will continue to price in high odds of another Bank of Canada rate hike.”
Money markets predict that the Bank of Canada will raise interest rates again this year by about 65%, down from 80% before the data were released. The move lower comes as demand for safe-haven assets increased and wage inflation in the United States showed signs of cooling.
On Wednesday, the Bank of Canada held its key overnight interest rate, marking the first major central bank to put an end to rate hikes that began when inflation rose sharply last year.
The Bank of Canada (BoC) said on Thursday that it is analyzing economic data to determine whether it can maintain its key overnight rate of 4.50 percent or needs to raise it.
The BoC has stated that it will maintain interest rates as long as inflation falls in line with its forecast for January. However, Carolyn Rogers, Senior Deputy Governor (NYSE:) said on Thursday that there was still too much demand in the economy and that the labor market was “incredibly tight.”
According to Doug Porter, chief economist at BMO Capital Markets, “there simply is no sign that the labor market is succumbing whatsoever to the rapid-fire tightening of the past year.”
“The Bank almost certainly will be back hiking rates again if the inflation numbers in the coming months are disappointing.”
The central bank expects inflation to slow to 3% by the middle of the year, down from a peak of 8.1% in January.
According to Statscan, fewer people worked in business, building, and support services in February than in other industries, such as social assistance and healthcare.
The gains in healthcare and public administration helped the services sector add a net 4,200 jobs, while the goods sector added a net 17,500 jobs, led by the utilities and manufacturing sectors.
In February, total hours worked increased by 0.6 percent, or 1.4%, year-over-year.
After earlier touching a low of 1.3861, the Canadian dollar was trading 0.2% higher at 1.3795 to the US dollar, or 72.49 cents.
More:
Investors fear consequences of high Fed rate hike
Employment in U. S. private sector grew much stronger than expected
