Surprise bump in private sector hiring fuels job gains

This suggests there is more capacity in the economy before inflation pressures begin to mount.

The country saw a surprise rush of 66,800 net new jobs in January in a gain fuelled by a hiring surge in the private sector, Statistics Canada said Friday.

The agency’s labour force survey said more people searched for work last month, which pushed the unemployment rate to 5.8 per cent, up from its 43-year low 5.6 per cent in December. The biggest boost came from the number of private-sector employee positions, which climbed by 111,500 in January for the category’s biggest month-to-month increase since the agency started collecting the data point in 1976. The number of self-employed positions, which can include unpaid work, declined by 60,700.

The services sector saw a gain of 99,200 positions, led by new work in wholesale and retail trade, while the goods-producing industries experienced a net loss of 32,300 jobs, the report said.

“Definitely the headline job gain was very impressive,” said BMO chief economist Douglas Porter. “And even going into some of the details there was an incredible show of strength, supposedly, from the private sector. We actually saw a record gain in private-sector payrolls.”

But Porter said he used the word “supposedly” because monthly job numbers tend to bounce around a little bit.

It’s better, he said, to look at the three-month and sixmonth trends, although he also described those results as solid in recent months.

He said it’s also important to consider that growth in Canada’s population and labour force has accelerated, thanks in large part to immigration. Due to this, the country almost needs big monthly job numbers just to keep the unemployment rate steady, Porter added.

Sherry Cooper, chief economist for Dominion Lending Centres, called the increase in the number of people looking for work a sign of strength.

“This suggests there is more capacity in the economy before inflation pressures begin to mount — a big point for the Bank of Canada,” she wrote in a research note to clients Friday.

Year-over-year average hourly wage growth in January for permanent staff was 1.8 per cent, up from December’s reading of 1.5 per cent.

Even with the improvement, the January number remained just under the inflation level, which suggests Canadians’ salaries could have a tough time keeping up with rising prices for consumer goods.