Analysts surveyed by Reuters had forecast that a net 12,000 jobs would be gained in March and the unemployment rate would edge up to 5.1%. It was the seventh straight monthly job gain and brought the net increase in the number of people employed since September to 383,000. Since December, the jobless rate has stayed just a notch above the record low of 4.9% observed in mid-2022. "The big picture is just the resilience," said Andrew Kelvin, chief Canada strategist at TD Securities. "We've yet to see the impact of high interest rates slow the labor market, which is problematic for the Bank of Canada in that they really need to see the labor market slow to bring inflation sustainably back to 2%." After eight consecutive rate hikes to tame inflation, which peaked at 8.1% last year, the Bank of Canada (BoC) left its key overnight interest rate on hold at the 15-year high of 4.50% in March. Thursday's jobs figures as well as robust GDP data released last week are likely to complicate the central bank's plans to avoid further rate moves. The average hourly wage for permanent employees rose 5.2% in March on a year-over-year basis, down from 5.4% in February.
The bank's next rate decision is due on Wednesday.
"The combination of still-strong job growth, a tight jobless rate, and +5% wage growth is likely still too hot for the Bank of Canada's comfort," said Doug Porter, chief economist at BMO Capital Markets. "Even so, this generally solid report will not prompt the BoC off the sidelines."
All 33 economists
polled by Reuters agree that the BoC will hold its key overnight rate steady next week.
"Look for policymakers to hold the line next week," said
Royce Mendes, head of macro strategy at Desjardins. "They'll
keep the door open to more hikes, but the recent banking sector
turmoil raises the bar to unleash any more rate increases."
The Canadian dollar was trading 0.2% lower at 1.3488 to the greenback, or 74.14 U.S. cents, but was still headed for a weekly gain. There were 18,800 full-time jobs added in the month, and 15,900 part-time jobs.
The employment gains last month were driven by the services
sector, which added a net 75,500 jobs, mostly in transportation
and warehousing as well as support services. Those additions
more than offset the decline of 40,900 jobs in the goods sector,
which was dragged down by job losses in construction as well as
natural resources.
(Reporting by Ismail Shakil and Steve Scherer in Ottawa;
Additional reporting by Dale Smith in Ottawa and Fergal Smith in
Toronto; Editing by Paul Simao, Conor Humphries and Mark Porter)
