OTTAWA – Canada’s labour market saw a surge in new jobs last month that drove down the unemployment rate and provided another clue that the hobbled economy could be regaining strength.
Experts say Friday’s better-than-expected findings in Statistics Canada’s labour force survey fuel the argument that the economy is starting to make its long-awaited positive adjustment to the weaker dollar and low oil prices.
The job market generated 40,600 net new positions in March, dropping the jobless rate to 7.1 per cent from its 7.3 per cent reading the previous month.
A closer look at the details of the data also showed encouraging signs. Of the new jobs, 35,300 were full time, including a large proportion of private sector jobs.
“It gives us a picture of a job market that I think overall is pretty healthy given the current circumstances,” said Desjardins senior economist Jimmy Jean, referring to the struggles in the oil sector linked to the plunge in crude prices.
In recent weeks, indicators have churned out unexpectedly robust numbers for areas such as economic growth and retail and manufacturing sales.
Jean was also pleased to see an increase in the number of higher-value services jobs, which he believes will be key to helping Canada bounce back from the oil slump.
The biggest gain last month was registered in services industries, which added 74,700 net new jobs.
“It is encouraging to see the evidence of perhaps a shift, or the notion, that the worst might be behind (us),” Jean said.
“I think the employment numbers tend to echo that story as well.”
Compared with 12 months earlier, Canada has added 129,600 net new jobs overall – a year-over-year increase of 0.7 per cent.
A consensus of economists predicted the country would add 10,000 net jobs in March and for the unemployment rate to stay at 7.3 per cent, according to Thomson Reuters.
Considering the significant economic challenges faced by the commodity sector, Jean was encouraged that the March report boosted Canada’s six-month average for monthly job gains to about 11,000. He said that, on average, the job market adds 16,000 positions per month under more normal economic conditions.
However, there is no guarantee the strong start to 2016 will continue in the coming months, especially if oil prices stay low, he said.
“The outlook is still fragile.”
In addition, the largely positive survey results also contained disappointment.
It found that the manufacturing sector’s job market contracted 1.8 per cent compared with February. In all, the industry shed 31,800 jobs, with the losses felt in each of the biggest provinces.
“This is disappointing because the economy is supposed to be rebalancing toward manufacturing,” said Frances Donald, senior economist at Manulife Asset Management.
She said the manufacturing issue could be just a blip and must be monitored going forward. It was really the only “black mark” in the data, she added.
Even hard hit, energy-rich Alberta saw an improvement in its unemployment rate, which fell to 7.1 per cent in March from 7.9 per cent the month before, thanks to increases in the number of retail and wholesale trade positions.
“We can add the March labour market report to the growing list of the better-then-expected Canadian data in the first quarter,” Donald said.
“All of these put together do suggest that the economy is rebounding more aggressively, more positively than most private sector economists – in addition to the Bank of Canada – had expected.”