Today's Labour Force Survey (LFS) for February was much stronger than expected, questioning how long the Bank of Canada's rate pause can last. Following the 150,000 jobs gain in January, economists expected a small increase of 10,000 positions and a jobless rate of 5.1%. Instead, the economy added 21,800 jobs in February, and the unemployment rate held steady at 5%, near a record low.
This marked the sixth consecutive month of job creation, taking the total employment gains since September to 348,000. Governor Tiff Macklem has repeatedly commented that the jobs market is overheated and surprisingly strong. The intention of his pause in rate hikes is to assess the impact of the cumulative rise in interest rates on the Canadian economy. While some sectors have slowed--housing, business investment and inventories--the labour market continues to churn out jobs, and job vacancies remain high.
Much of the job creation was in health care and social assistance. The number of vacancies in the industry has remained elevated as unmet labour demand moderated in other industries. Government employment also added to the hiring.
In contrast, employment fell in Business, building and other support services. Following a notable increase at the start of the year, employment was little changed in wholesale and retail trade. The number of construction workers was little changed, following two consecutive monthly gains in December and January.
Also troubling to the Bank of Canada was the rise in wage inflation. On a year-over-year basis, average hourly wages rose 5.4%, the strongest pace since November.
The unemployment rate held steady at 5.0% in February, just shy of the record-low 4.9% observed in June and July of 2022. |
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