January labour market beats expectations – but the BoC won't be breathing a sigh of relief just yet
Canadian employers added a net 76,000 jobs in January, posting a better-than-expected performance as the unemployment rate surprisingly dipped a percentage point to 6.6% even amidst growing economic uncertainty.
Statistics Canada data showed on Friday that the labour market surged past expectations last month, with economists having forecast the addition of just 25,000 jobs and a jump in the jobless rate to 6.8%.
For the Bank of Canada, the news marks a welcome sign of a fairly resilient economy – but there’s still “plenty of slack” in the labour market, according to CIBC economist Andrew Grantham, and he said there’s still a strong case for rate cuts soon.
“We continue to think that even lower interest rates will be needed for the economy to fully absorb that slack,” he wrote, “particularly given heightened trade uncertainty which could impact hiring decisions ahead.”
Private sector gains spurred January’s labour market growth, with private employers tacking on 57,200 jobs to offset a small decline of 8,200 in public sector employment. Still, employment in the public sector remains 107,000 higher than the same time last year, with the number of self-employed workers also climbing by 22,900.
Canada’s economic outlook was thrown into turmoil last week as US president Donald Trump pushed ahead with plans to impose huge tariffs on Canadian imports crossing the border, although prime minister Justin Trudeau struck a last-minute deal with the US administration on Monday to avert that threat for 30 days.
But potential US tariffs remain a massive concern for Canada’s central bank, with former BoC governor Stephen Poloz saying this week that the economy would likely face a huge shock if Trump decides to formalize the levies in March.
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