Canada employment data for March: it's all good

Over the past week or two there have been a couple of statistical releases that seemed to suggest that the strong Canadian GDP data for January might prove to be a flash in the pan. Examples?  The trade deficit balloooned in February as both exports and imports fell, and hiring plans in the resource sector turned sharply negative. Today, however, StatsCan redressed the balance with a labour force report for March that far exceeded expectations.

The Canadian economy added just less than 41,000 jobs in the month, against an analysts' consensus of just 10,000.  All of the new jobs were in the private sector, as opposed to self-employment and the public sector, although the past volatility of the split between these categories means that the data need to be treated with some caution.  Almost all of the jobs were full-time -- 35,000 out of the 41,000 total.  There was job growth in provinces that have recently shown weakness, including Alberta, where 19,000 jobs were added in the month.

Year-on-year, employment has grown 0.7 percent, with quarter-to-quarter growth of 0.2 percent in each of the past three calendar quarters.  What next?  One indicator of possible continued job growth is that the increase in the number of hours worked in the past 12 months, at 1.2 percent, is comfortably in excess of the growth in employment.  Employers routinely increase the hours of their existing workforce on the first signs of growing demand, only adding new positions when they are confident that their higher need for labour will be sustained. If the economy continues to move ahead slowly but steadily, as seems likely, the discrepancy between the growth in employment and hours should begin to narrow, supporting further job gains.

The Canadian dollar had weakened in recent days but has rebounded smartly in response to today's data. However, nothing here suggests that the Bank of Canada will be changing its policy stance for many months to come.  Over at the Finance Ministry, meanwhile, new Minister Bill Morneau must be wondering how long his beginner's luck can continue.