Canada's job growth momentum stalled in March, signalling that the economy will not likely be able to maintain the heated expansion it experienced at the start of 2011.
A surprisingly weak employment figure released Friday showed a net loss of 1,500 jobs, when economists had been expecting a gain of 30,000.
While the headline number was shocking, especially after five months of improvement and a string of strong GDP reports, it is not out of whack with an economy that is expected to chug along at a moderate pace for the balance of the year.
"[The number]is consistent with where the economy is headed, " said Craig Alexander, chief economist at Toronto-Dominion Bank.
He noted that the Canadian economy's annualized growth rate in the first quarter was likely around 4 per cent, but suggested that will probably be the high point for the year. For the balance of 2011, he expects growth to slow to an average of about 2.8 per cent.
Indeed, he said, that number corresponds with the four-month moving average of net new jobs, which is about 28,000 currently, even with the poor number in March.
In addition, Mr. Alexander said, some of the details in the latest employment report give rise to some modest optimism.
For example, the number of full-time jobs actually rose by 90,600 in March, although that was overwhelmed by a drop of 92,100 part-time jobs. The number of jobs in construction rose by more than 24,000.
Also, the number of hours worked increased and the year-over-year pace of average hourly wage growth accelerated to 2.7 per cent from 2.5 per cent in the previous month. Those stats suggest that fewer workers are having to settle for low-paying, short-term jobs.
And because the labour force shrank somewhat, the overall unemployment rate declined to 7.7 per cent in March from 7.8 per cent in February.
So far, unemployment has not been a major factor in the election campaign, and the signals from the latest numbers aren't likely to change that significantly. They would provide only modest ammunition for either of the major parties.
Conservative Leader Stephen Harper has argued that maintaining planned corporate tax cuts is one of the best ways to protect and create jobs, and he also has proposed to boost training for older workers, enhance work-sharing, give tax breaks to small businesses and extend pilot projects that have made it easier for some Canadians to qualify for employment insurance.
Liberal Leader Michael Ignatieff, meanwhile, has pledged to cancel the last phase of the tax cuts, and also to help working parents and workers with sick and dying relatives by creating more daycare spaces and making it easier to take time off.
The jobs report represents the last major economic data before Bank of Canada Governor Mark Carney's interest rate decision on Tuesday, when he is universally expected to leave borrowing costs untouched due to a host of economic uncertainties outside Canada's borders.
Douglas Porter, deputy chief economist at BMO Nesbitt Burns, said the fact that the employment numbers were "broadly neutral" means that they will "make no impact on next week's rate decision."
Most economists project that the Bank of Canada will raise interest rates slightly at its setting in July, and that any further increases after that will be very gradual.
As always, what happens to the economy south of the border will have an important impact on Canada's outlook. At the moment, the U.S. employment situation looks positive, with the labour department reporting last week that payrolls grew by a net 216,000 in March, surpassing projections and bringing the unemployment rate to 8.8 per cent, the lowest in two years.
U.S. factories are leading the rebound and are expected to continue adding staff in the months ahead, evidence that tax cuts and the Federal Reserve's moves to stimulate demand are working.
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