Economy adds 41,000 jobs in February, but employment gains lag population growth

Canada’s labour market is getting a helping hand from population growth as the economy added 41,000 jobs in February.

Statistics Canada also reported on Friday that the unemployment rate ticked up to 5.8 per cent.

Job gains, which were driven by full-time employment, were spread across several industries in the services-producing sector, with the strongest growth in accommodation and food services.

The February increase comes after similar stronger-than-expected job gains in January.

The Bank of Canada’s steep interest rate hikes have helped cool the labour market over the last year by causing a pullback in spending. However, strong population growth appears to be offsetting some of those effects, including in the labour market.

“Certainly, that overwhelmingly large rise in full-time jobs is quite impressive,” said BMO chief economist Douglas Porter in an interview.

“(But) it’s quite clear also that the numbers are being heavily influenced by the incredibly rapid population growth we’re seeing.”

Over the last year, Canada’s population grew by 1,031,200 people while employment rose by 368,000 jobs.

Economists reacting to Friday’s jobs report say it shouldn’t move the needle for the Bank of Canada.

The central bank, which is holding its key interest rate at five per cent, is widely expected to begin lowering its benchmark rate in June.

On Wednesday, governor Tiff Macklem was tight-lipped about the future path of interest rates.

“With inflation still close to three per cent and underlying inflationary pressures persisting, the assessment of governing council is that we need to give higher rates more time to do their work,” said Macklem in a news conference.

“We’ve come a long way in our fight against high inflation. But it’s still too early to loosen the restrictive policy that has gotten us this far.”