Canada’s unflappable labour market posted its largest single-month employment growth in decades in April, shaking off a winter of economic doldrums in a burst of hiring across most parts of the economy.
Statistics Canada’s monthly labour force survey showed that employment surged by 107,000 jobs in the month, the biggest figure since the statistical agency began using comparable methodology in 1976. On a percentage basis, it was the largest monthly gain since 1994.
The unemployment rate dipped to 5.7 per cent from 5.8 per cent, despite increasing participation levels as more Canadians flooded into the booming labour market seeking work. Hourly wage growth also accelerated to 2.5 per cent year over year, an eight-month high and the fifth straight increase.
The report far exceeded even the wildest expectations of economists, who had, on average, anticipated a much more modest 15,000-job increase after employment had dipped by 7,000 in March.
“It was kind of a ‘wow.’ Pretty great job numbers,” said Dawn Desjardins, deputy chief economist at Royal Bank of Canada. “There is still a voracious appetite to hire people.”
Although the monthly labour force survey is notorious for its considerable statistical margin of error – Statscan has 68-per-cent confidence that the month-to-month employment change is accurate to within 29,600 jobs, plus or minus – the report nevertheless continues a remarkable trend of labour growth, even as other elements of the economy have eroded.
Despite evidence of little to no economic growth over the fourth quarter of 2018 and the first quarter of this year, the country has added more than 300,000 jobs in the past six months; the small dip in March was the only decline in that time.
“While we are not going to complain about the jobs numbers of late, their strength is a bit of a mystery when other economic indicators paint a more modest picture of the Canadian economy,” Toronto-Dominion Bank senior economist Brian DePratto said in a research note.
Nevertheless, the jobs report adds an exclamation point to other strong data this week – on trade and on housing starts – that indicate the Canadian economy has revved up after an unusually harsh winter that further weighed on already weak growth.
“So much for the soft Canadian economy, or so it seems,” Avery Shenfeld, chief economist at Canadian Imperial Bank of Commerce, said in a research report. “Even a skeptic has to conclude that, alongside a pick-up in exports and housing starts, there was a spring in Canada’s step as spring arrived.”
“It does augur well for economic growth,” Ms. Desjardins added, noting that the strong job market will fuel consumer activity in the coming months.
The employment increase cut across much of the labour market: full-time (up 73,000) and part-time (up 34,000); private sector (up 84,000) and public sector (up 23,000); goods-producing sectors (up 40,000) and services-producing sectors (up 67,000). Statscan said 12 of 16 industry groups posted higher employment, led by jumps of 32,000 in the wholesale and retail sector, and 29,000 in construction.
Hiring was up in six of 10 provinces, led by Ontario (47,000) and Quebec (38,000). In Alberta, where struggles in the oil industry have weighed heavily on the labour market, employment jumped 21,000 – the strongest gain in 16 months.
The April jobs surge certainly caught the eye of Bank of Canada watchers. After the bank raised rates three times last year in light of a growing economy that was approaching full capacity, the slowdown in recent months prompted it to put further rate increases on hold, likely for the next several months at least – fuelling speculation that it might even reverse course and cut rates this year. But the return to strong job gains in April, together with rising wage growth, should convince the central bank that the economy still faces significant capacity and inflation pressures from the labour market – enough, at very least, to keep a rate cut off the table. After the jobs report, bond-market indicators of rate expectations reduced the odds of a cut by year-end to 20 per cent, from 35 per cent a day earlier.
That shift in rate expectations also influenced activity in the Canadian dollar, which traded late in the day at 74.53 US cents, up one-third of a penny on the day.
Still, economists worry that the booming employment numbers are unsustainable, given how out of step they are with many other economic indicators, which continue to suggest no better than modest growth this year.
“It appears likely that this disconnect resolves itself through a more modest pace of hiring as the year progresses, alongside a recovery of economic activity,” TD Bank’s Mr. DePratto said.