The volatility in employment continued in March with a sharp 54,500 jobs lost in the month following a 50,700 jump in February and January’s 21,900 drop.
What's more, figures released by Statistics Canada show the unemployment rate rose although stayed in the 7.0% to 7.2% range established since November. Today's weaker showing overshot expectations that to correct for overstated strength in February, there would be only a marginal increase in March employment of 6,500. The unemployment rate conversely was expected to hold steady at 7.0% though it increased to 7.2%.
The sources of the weakness in employment were relatively broadly based. Private employment dropped 85,400, public employment dipped by 7,700. Self-employment however rose by 38,700. The losses were concentrated in full-time employment which dropped by 54,000 with part-time employment relatively steady, off 400.
On an industry basis, the weakness reflected employment declines in manufacturing, construction, accommodation and food services, and public administration. There were increases in transportation and warehousing, professional services and educational services.
On a provincial basis, the largest declines were recorded in Quebec, B.C., Alberta and Ontario. Nova Scotia was the only provinces that managed to eke out any gains in the month of March.
The reprieve in hiring in March was expected following the outsized increase in February. However, in the first quarter of 2013 on average, 8,600 jobs were lost per month likely in response to the slowing in growth evident over the second half of 2012.
Experts' monitoring of the economic data indicates a pickup in the pace of activity with real GDP on track to record a 1.9% annualized gain in the first quarter. This is slower than the Bank of Canada expected in its January forecast and analysts expect the Bank to revise down their forecast on April 17.
What will be more interesting is whether this leads them to reduce the forecasts for growth in the following quarters. We are expecting that economic growth will gradually accelerate supported by low interest rates and a stronger U.S. economy.
Assuming only modest downward revisions to growth near term, the central bank is likely to maintain the overnight policy rate at 1.0% for the remainder of 2013 and into 2014 given that the slack created in the second half of last year is keeping inflation pressures contained.
