After a remarkable six-month run that saw the Canadian economy add almost 300,000 jobs, some sort of pullback was just about inevitable. Indeed, some of us can claim to have seen it coming, though the reliably unreliable "Bay Street consensus" was still looking for further gains in the March data. In the event, Statistics Canada this morning reported a loss of 7,200 jobs in the month, with the unemployment rate unchanged at 5.8 percent.
In truth this is an almost insignificant fall, so it is far too soon to suggest that the positive underlying trend has been broken. The monthly decline is well inside the 30,000 standard error that StatsCan estimates for the employment series, and the strong seasonal pattern in Canadian employment, courtesy of the extreme climate, also needs to be kept in mind. Still, given the much slower growth seen in the economy in the final quarter of 2018, it would not be a surprise if gains in employment in the next few months are limited at best.
One way of looking through the seasonality and volatility of the data is to focus on the year-on-year data. These still look strong. Employment grew by 332,000 in the year to March, or 1.8 percent, with 204,000 of the newly-created jobs being full-time positions. Wage gains remain firmly under control, with the annual increase of just under 2,4 percent in March almost identical to February's increase.
Despite some significant regional disparities -- provincial unemployment rate range from 11.5 percent in Newfoundland and Labrador to 4.9 percent in Saskatchewan -- a national jobless rate of 5.8 percent is as close to "full employment" as Canada ever gets. This would normally have the Bank of Canada on full alert for the possible emergence of inflationary pressures, but the continued moderation in wage gains means there is no reason for the Bank to consider further policy tightening any time soon.
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