Statistics Canada statistics indicated on Friday that the Canadian economy generated significantly fewer jobs than predicted in April, but the unemployment rate fell to a new record low of 5.2 percent, laying the stage for another hefty rate rise by the central bank.
After generating over 400,000 net jobs in the previous two months, Canada only gained 15,300 net positions in April, significantly less than expert projections of 55,000. Part-time employment grew at a faster rate than full-time employment.
“I’d say things have returned to normal. When you look at the increase in employment, it’s fairly near to what you’d anticipate in ‘normal times’ in this economy “BMO Capital Market Economics’ senior economist, Doug Porter, stated.
Nonetheless, hours worked decreased during the month, owing to absences due to sickness as another wave of coronavirus infections hit the country.
Permanent employee hourly wages again fell short of expectations, growing only 3.4 percent year over year, down from 3.7 percent in March.
While the labor force participation rate fell, core-age workers’ involvement increased, and the labor market tightened, according to Statscan.
“In recent months, a variety of signals have pointed to an increasingly tight labor market,” Statscan said, noting that the number of part-time workers who say they prefer full-time employment has dropped to its lowest level on record.
According to experts, this tightening is projected to boost wage rises higher in the following months, allowing the Bank of Canada to proceed with another large rate hike on June 1.
In a report, Royce Mendes, director of macro strategy at Desjardins Group, said, “The somewhat weaker-than-expected employment figure shouldn’t change market pricing for a 50 (basis point) raise because the economy is still overheating by most metrics.”
Last month, the Bank of Canada increased its policy rate by 50 basis points, signaling that interest rates will need to rise. A second half-percentage-point hike in June has been completely priced into the money markets.
The Canadian dollar was trading 0.3 percent down against the US dollar, or 77.69 cents, at 1.2871.