OTTAWA, Feb 10 (Reuters) - The Canadian economy smashed expectations by adding a net 150,000 jobs in January, data showed on Friday, putting pressure on the Bank of Canada to reconsider its "conditional pause" to interest rate hikes.
The jobless rate held steady at 5%, Statistics Canada (Statscan) said. Analysts surveyed by Reuters had forecast a net gain of 15,000 jobs and for the unemployment rate to edge up to 5.1% in January.
Statscan revised December's net gains downward to 69,200 jobs from 104,000, previously.
Labor market tightness was one of the main reasons the central bank had raised rates on Jan. 25 to 4.5%, the highest level in 15 years.
It then became the first major central bank to say it would hold off on further increases to let previous hikes sink in.
"The Bank of Canada's conditional pause on interest rates was likely done partly so that policymakers didn't feel the need to respond to any single strong data print, no matter how strong," said Andrew Grantham, an economist at CIBC Economics, in a note.
"However, that won't stop markets reacting to today's strong data by pricing in a greater probability of further hikes, and pricing out rate cuts," he said.
January's job additions, the fifth consecutive monthly gain, were driven primarily by the core-age group of 25 to 54 year-olds and were spread across several industries, Statscan said.
While the markets showed they considered the Bank of Canada's decision to pause rate hikes as a signal that the next move would be to cut them, Governor Tiff Macklem did call it a "conditional" pause and has not ruled out more increases.
"I don't necessarily think that it's an ironclad prolonged pause. It's a conditional pause and we just have to watch the data," said Derek Holt, vice president of capital markets economics at Scotiabank, who now says a rate hike in April is more likely.
The Canadian dollar strengthened 0.6% to 1.3375 per greenback, or 74.77 U.S. cents.
Employment in the goods sector increased by a net 25,400 jobs led by construction. Service sector jobs jumped by a net 124,700, mostly in wholesale and retail trade and the healthcare and social assistance subsectors.
The average hourly wage for permanent employees rose 4.5% in January on a year-over-year basis, down from 4.7% in December.
