Canada added 32,300 jobs in March, Statistics Canada reported Friday, more than half of which were in construction. The unemployment rate was unchanged at 5.8 percent, matching the lowest in records back to 1976. Annual wage gains averaged 3.2 percent in the first three months of 2018, the strongest quarterly pace since 2015.
The numbers are consistent with a tightening labor market and shrinking levels of slack after Canada’s strong economic performance last year prompted a hiring boom. Economists estimate “normal” employment gains for Canada’s economy — those that keep wage pressures at sustainable levels — in the vicinity of about 15,000 to 20,000. Gains last year were almost double that pace.
“Overall, the labor market is still showing signs of resilience, despite uncertainty around trade and tougher housing regulations,” David Madani, senior Canadian economist at Capital Economics, said in a note to investors.
How quickly the economy expands without triggering inflation is a key question for the Bank of Canada. Even with last year’s surge in hiring and wages gaining, the central bank has said pockets of untapped labor market slack remain that could limit wage and price pressures.
Wages have been showing some signs of strength in recent months. Annual pay increases accelerated to 3.3 percent in March from 3.1 percent in February. Wage gains for permanent workers were unchanged in March from February at 3.1 percent, but have been up on average in the first quarter.
The Canadian dollar was little changed after the report, trading at C$1.2752 per U.S. dollar at 8:42 a.m. The fact that the jobless rate didn’t fall further and the wage gains for permanent workers didn’t accelerate will likely prevent any rate increases in coming months from the Bank of Canada, said Avery Shenfeld, chief economist at CIBC World Markets. The central bank, which has raised interest rates three times since July, is expected to hike twice more this year.
“The absence of any acceleration in wages or drop in the jobless rate should be enough to keep the Bank of Canada on hold for now, particularly given only muted GDP growth in the most recent two months of data,” Shenfeld said in a note to investors.
Construction added 18,300 jobs in March, the biggest monthly gain for the industry since February 2016, fueled by much stronger new home construction this year than most economists have been expecting.
- The monthly gain was all full time workers, which saw a net gain of 68,300
- Hours worked in March were up 2.2 percent from a year ago. That’s slower than the 3.2 percent increase in February but in line with the average annual increase over the past 12 months
- Public administration added 11,900 jobs. Manufacturing was a drag on employment, with the sector losing 8,300 jobs during the month.