Canadian companies are hiring in force again, a sign that the country is weaning itself off government stimulus.
The job gains point to a recovery with self-sustaining momentum as consumers with new paycheques spend and stronger demand encourages businesses to hire further.
The mounting crisis in Europe and the turmoil in financial markets, however, are reminders that Canada's economy isn't in a vacuum and could temper any sense of optimism.
“The private sector is clearly beginning to hire in a big way in Canada, and in an important way in the U.S. as well, which suggests that it's simply not true that this recovery still relies on the artificial stimulus of government spending,” Douglas Porter, deputy chief economist at BMO Nesbitt Burns, said in an interview. “Unfortunately, the confidence angle might be attacked because of what's happening in global financial markets.”
While the latest jobs report from Statistics Canada Friday led to renewed speculation that Bank of Canada Governor Mark Carney would raise interest rates from their record low levels next month, that is by no means a done deal, given the unpredictability of Europe's mess and the volatility in markets that it's helping to fuel. Should the central bank tighten in June, policy makers are likely to take a slow and measured approach, economists said.
“This is underscoring that the world's troubles are not entirely in the rearview mirror,” Avery Shenfeld, chief economist at Canadian Imperial Bank of Commerce, said in an interview. “The lesson of 2009 for Canada was what happens outside our borders clearly matters.”
Canada's economy churned out a monthly record number of jobs in April, Statistics Canada said, as employers added 108,700 workers and the jobless rate dipped a notch to 8.1 per cent. Most of the gains were in the private sector, led by men and youth in the construction, retail and building services sectors, with a split between full and part-time work.
