'The numbers are volatile and it's been on a pretty strong run over the prior half year': Economist
OTTAWA (Reuters) — The Canadian economy unexpectedly shed 7,200 jobs in March, its first decline in seven months, Statistics Canada data showed on Friday, reinforcing market expectations that the Bank of Canada will keep interest rates unchanged next month.
The unemployment rate held steady at 5.8 per cent for the third straight month. Analysts in a Reuters poll had forecast a marginal gain of 1,000 jobs in March, following outsized gains in the previous two months, and no change in the unemployment rate.
Despite the drop in March, employment rose by 116,000 jobs in the first quarter.
"We got a little dip in employment, but the numbers are volatile and it's been on a pretty strong run over the prior half year," said Nathan Janzen, senior economist at Royal Bank of Canada.
Analysts said the small decline in March, following six months of consecutive gains, was unlikely to alter the Bank of Canada's view of employment as a bright spot in Canada's economy.
"After such a strong run of employment gains, a modest pull-back in March is of little concern to us and won't raise many eyebrows at the Bank of Canada either," said Andrew Grantham, Senior Economist at CIBC Capital Markets, in a note.
Bank of Canada governor Stephen Poloz expressed guarded optimism earlier this week that Canada would emerge from a soft patch, but said the economic outlook still warrants an interest rate below the neutral range.
The central bank, which has hiked rates five times since July 2017, held rates steady last month. The next rate decision will be April 24, when the bank also will provide its quarterly monetary policy update.
The Canadian dollar hit a one-week low at 1.3403 after the jobs data was released but has since pared some of its decline.
The economy added 1,100 goods producing sector jobs, mostly in manufacturing, and shed 8,800 services sector jobs, mostly in health care and social assistance, and the business, building and other support services category.
Full-time jobs dropped by 6,400 from February to March, while 900 part-time jobs were shed, the data showed.
Canada's two most populous provinces, Ontario and Quebec, shed jobs in the month, while British Columbia and Saskatchewan posted job gains.
The average year-over-year wage growth of permanent employees — a figure closely watched by the central bank — was 2.3 per cent in March, up from 2.2 per cent in February.