Canada Job growth 'stronger than expected'

by Grant Surridge — May 9, 2008

Almost 350,000 jobs have been created over the past 12 months, Statcan said.

The employment rate - the percentage of the working-age population who are employed - continued to hover near a record high in last month.

"Overall the report is a little bit stronger than expected," said Doug Porter, deputy chief economist at BMO Capital Markets.

"It does seem like job growth has lost a touch of momentum from the extraordinary strong pace of the past couple years," he said.

The report cements market expectations for another interest rate cut by the Bank of Canada on June 10.

"From a policy standpoint it really doesn't change the outlook for the Bank of Canada for June 10 in that the expectations remain that they will go another 25 basis points at that juncture," said Stewart Hall, market strategist at HSBC Canada.

Markets had expected, on average, some 10,000 additional jobs to be created last month and for the jobless rate to remain unchanged.

The Canadian dollar rose after the report to 99.30 U.S. cents, from its pre-data level around 99.01 U.S. cents. Bonds were higher across the curve.

One encouraging bit of data for the central bank was that wage growth subsided in April, a sign of easing pressures in the job market but also allowing the bank to cut rates without fear of fueling inflation. The average hourly wage of permanent employees rose 4.2% year-over-year, down from 4.7% in March.

All the gains in April were in full-time employment. Most new workers were self-employed and most got jobs in the public sector, which added 9,100 workers to its payroll while the private sector shed 8,300.

The Canadian labor market persistently surprised with its strength throughout 2007 and in the first two months of this year with job gains of over 40,000 in January and February.

In the 12 months through April, Canada added 348,000 jobs for employment growth of 2.1%, and full time jobs grew twice as fast as part-time ones, Statscan said.

When adjusted for comparison to the United States, Canada's employment pictures still looks much healthier with an employment rate of 64.5% in April compared to 62.7% for the United States in the same month.

Despite sharp declines in manufacturing jobs in both countries, Canada has added construction jobs whereas U.S. employment in construction and financial services has dropped.

The Bank of Canada said last month it expects the job market to soften over the course of this year but since it is coming off very strong levels, consumer spending will remain relatively strong and motor the economy through the tough times.

Source:National Post News