OTTAWA (Reuters) — The Canadian economy added a record 106,500 jobs in April, Statistics Canada data showed on Friday, a surge that reinforces market expectations that the Bank of Canada will keep rates steady for now.
The April gain far outstripped analysts' expectations of 10,000 jobs. The unemployment rate declined to 5.7 per cent, the lowest since December, from 5.8 per cent in March. Analysts in a Reuters poll had forecast 5.8 per cent.
The Canadian dollar rallied on the back of the job report to 1.3400 against the U.S. dollar.
The central bank has raised rates five times since July 2017, but late last month it held interest rates steady and removed wording around the need for future hikes, while lowering its growth forecast for 2019. Bank of Canada Governor Stephen "Poloz is going to stay on the sidelines for a little bit here," said Andrew Kelvin, chief Canada strategist at TD Securities. "Any speculation around them switching back to a tightening bias would be premature."
Not all the recent economic data has been so positive. Canada's economy stalled in February, and a survey released last month showed business sentiment has turned slightly negative as a result of a weak energy sector, a housing slowdown, and global trade tensions.
The average year-over-year wage growth of permanent employees — a figure closely watched by the central bank — was 2.6 per cent in April, up from 2.3 per cent in March, and the highest since August 2018.
"There's nothing in the inflation rate pushing the Bank of Canada to hike. These wage numbers won't do it," said Nathan Janzen, a senior economist at the Royal Bank ofCanada. "We still don't have any moves through 2020."
The job gain was led by employment increases in the two most populous provinces, Ontario and Quebec, which is good news for Prime Minister Justin Trudeau, who is trailing slightly in opinion polls ahead of the October national election. Ontario added 47,000 positions and Quebec 38,000, with the unemployment rate in Quebec at 4.9 per cent, the lowest since 1976, when comparable employment data was first collected, Statscan said.
The economy added 39,700 goods-producing sector jobs, mostly in construction, and gained 66,900 services-sector jobs, mostly in wholesale and retail trade.
Full-time jobs gained by 73,000 in April from March, while part-time jobs increased by 33,600, the data showed.
Separately, the value of Canadian building permits rose 2.1 per cent in March, driven higher by construction plans in the four Western provinces, after falling a revised 5.1 per cent in February, Statscan said.
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