The big bounce

Canada's employment data for February, released by Statistics Canada this morning, are simply remarkable. The economy added 337,000 jobs in the month, double the market expectation, more than reversing the 200,000 decline in employment reported for January. This brought the unemployment rate down by a full percentage point to 5.5 percent. Not only is this lower than the pre-pandemic rate of 5.7 percent -- it's within a tick of the all-time low of 5.4 percent posted in May 2019.

Are the details of the report as strong as the headline?  For the most part, they are. For example:

• the private sector more than fully accounted for the overall increase, adding 347,000 jobs in the month;
• particularly strong gains were seen in sectors that had been hard-hit by omicron-related restrictions at the turn of the year, with accommodation and food services employment up 114,000 and information, culture and recreation up 73,000;
• full-time employment rose 122,000 in the month, with the 215,000 rise in part-time employment reflecting the rebound in the sectors most affected by COVID restrictions; 
• job gains were seen in eight of ten Provinces, with Alberta and New Brunswick the only exceptions; 
• total hours worked rose 3.6 percent in the month and are now 1.7 percent above their previous all-time high, set in February 2020; 
• work-from-home, long-term unemployment and labour force underutilization all fell in the month. 

One indicator that is still lagging is wage growth. While the year-on-year growth in average hourly earnings rose to 3.1 percent in February from 2.4 percent in January, it remains far short of the rate of CPI inflation. Still, the evident tightness in the jobs market that today's report reflects will ben seen by the Bank of Canada as a further reason to continue gradually tightening its policy settings. 

The wild card now and for the foreseeable future is the Russian invasion of Ukraine. The February data were collected before that happened; the survey week for the March employment report starts this coming Sunday (the 13th).  There is little circumstantial evidence to suggest that the Ukraine situation is yet having any impact on economic activity and employment in Canada,  and COVID restrictions continue to ease, so another robust outcome seems likely.