Canada’s labour market did better than expected in March

Economy added 40,600 jobs, pushing back chance interest rates will be cut

Canada’s labour market appears to be performing surprisingly well at the moment.

Hiring activity in March more than made up for losses in the previous month and pushed the unemployment rate down to its lowest level in three months.

It also pushes back the chances that the Bank of Canada will consider cutting its trendsetting interest rate — now at 0.5 per cent — given that the job market looks healthier than many analysts had anticipated.

The economy, likewise, has been growing stronger than previously thought.

If anything, the central bank will likely keep the rate where it is for the rest of this year and — depending whether the economy continues to strengthen, perhaps helped along by the federal government’s stimulus-spending plans — it’s more likely rates will start going higher in 2017.

Probably the biggest surprise in Friday’s labour force report was seen in energy-hammered Alberta, where payrolls rose by the most in more than two years — mainly in the retail and wholesale trade sectors — and the jobless rate declined to a four-month low.

Overall, Statistics Canada said the economy added 40,600 net jobs in March, most of which were full-time positions, while the unemployment rate slipped to 7.1 per cent from 7.3 per cent in February.

The labour report is “welcome good news” for the economy, said Douglas Porter, chief economist at BMO Capital Markets.

As well, it will provide the Bank of Canada with “a bit more comfort” in upwardly revising its 2016 economic outlook — which in January was targeted at 1.4 per cent.

The Liberal government’s recent stimulus-heavy budget, released on March 22, will also help in the rate-decision process on Wednesday, when governor Stephen Poloz and his policy counsel also release their quarterly Monetary Policy Report.

“We’re probably done the rating-cutting cycle and the next move is likely to be up, it’s well down the line — and a lot of things have to right between here and there for the bank to actually raise interest rates,” Porter said.

“I would still agree with the market in that there is still a residual risk that the bank could actually trim rates again this year — admittedly, the odds are very long at this point.”

Most economists had predicted a jobs gain of just 10,000 in March, with the unemployment rate remaining at 7.3 per cent — which was a three-year high.

In February, Canada lost a net 2,300 positions.

Statistics Canada said full-time hiring was up by 35,300 in March, while 5,300 new part-time jobs were added.

For the first quarter of 2016 overall, meanwhile, jobs grew by about 33,000.

Meanwhile, Alberta delivered an unexpected turnaround in March, adding about 18,900 positions, fuelled by increases in retail and wholesale trade, even as the province continued to struggle with the collapse in energy prices.

The province’s unemployment rate declined to 7.1 per cent — the lowest since December last year — from 7.9 per cent in February, which had been the highest reading since 1995.

By industry, Friday’s jobs report showed a big jump nationally in health care and social assistance hiring — up by 24,900. Accommodations and food services added 17,700 workers.

On the negative side, the manufacturing sector shed 31,800 positions in March and construction lost 5,500 positions.