The national unemployment rate was unchanged at 6.1 per cent in April as Canadian employers added some 90,000 jobs, Statistics Canada reported Friday.
The Labour Force Survey shows employment gains were concentrated in part-time work and in the private sector, both accounting for roughly 50,000 new positions.
The professional, scientific and technical services and food and accommodation sectors drove job gains last month, in addition to health care and social assistance and natural resources industries.
Youth aged 15-24 in particular are seeing unemployment rise at faster rates than other demographics, StatCan noted. The jobless rate for youth was up 2.9 percentage points year-over-year to 12.8 per cent in April, marking the highest unemployment rate for this demographic since July 2016, outside the COVID-19 pandemic.
The April report marks a reversal from March where the economy shed 2,200 jobs.
CIBC executive director of economics Andrew Grantham said in a note to clients Friday morning that the April jobs report “easily beat” economists’ expectations.
Jobs report will give Bank of Canada 'some pause'
The Bank of Canada is watching the labour market, particularly the pace of wage growth, closely as it readies for its next interest rate decision in June. Average hourly wages were up 4.7 per cent in April, down from 5.1 per cent the month previous.
But the stronger-than-expected jobs report has divided economists reacting to the fresh data on Friday about what it means for the Bank of Canada.
James Orlando, director of economics at TD Bank, said in a note that even though the LFS is “notoriously volatile,” the April figures were a “shocker,” noting it was the biggest employment gain in 15 months.
“This report is likely to raise eyebrows at the Bank of Canada,” he wrote.
Renewed strength in the labour market will boost consumer spending power in the months ahead, Orlando said, which risks refuelling inflation at a time when the central bank is seeking confidence that price pressures will continue to ease.
Money markets trimmed their bets on a June rate cut to 42 per cent from 54 per cent, according to Reuters. Markets are now fully pricing in a cut in September compared to July before the report was released.
Orlando said he is in the camp for a July cut, as it gives the central bank “a little more time to ensure inflation remains on the right track.”
BMO chief economist Doug Porter agreed that the April LFS will give the Bank of Canada “some pause.” But he said the jump in 90,000 jobs will only spur “mild doubts” amid recent surges in the Canadian population offsetting any tightness in the labour market.
Job gains aside, Porter said that the unemployment rate rising more than a full percentage point year-over-year and signs of cooling in wages could end up being the trend monetary policymakers at the central bank focus on.
The upcoming inflation report for April will be the decider for the central bank, Porter said. He continues to pencil in a rate drop in June, with the caveat that such a cut will require a “seriously cool” core inflation reading at the next report to materialize.
While the April report was “certainly better than expected,” Grantham said the overall trend is still one of “loosening” in Canada’s once-tight labour market with signs of easing in wage pressures.
Grantham said he maintains the call for a June rate cut, but agreed with Porter that such a move will hinge on the next inflation report.
— with files from Reuters
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2024-05-10 12:36:04Z
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