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MNI: Canada Smashes Forecasts Again With 150K Jobs


Canada added 150,000 jobs in January, smashing market forecasts for a second month and denting the case for a central-bank rate cut later this year.

The unemployment rate was unchanged at 5% to keep it within one notch of a record low set last year, as the labor force grew at about the same pace as the number of new hires. Economists predicted 10,000 new jobs and a 5.1% unemployment rate. Last month Canada added 69,200 jobs.

Statistics Canada also said Friday that hourly wages rose 4.5% from a year ago. While slower than December's 4.8% gain, the agency said January's wage figure is artificially low because of widespread layoffs in low-paying service jobs in January 2022 during Covid lock-downs.

Employment growth this month was led by a 58,700 surge in wholesale and retail jobs, followed by 40,000 in healthcare and social assistance. Construction employment rose 15,800 in January, for a 7.6% gain over the past year. Full-time employment also dominated the report with 121,100 of those positions versus 28,900 new part-time jobs. 

Those details fly in the face of the Bank of Canada's view that its 425bps of rate hikes over the last year are working to cool an overheated economy, and Governor Tiff Macklem's comment Tuesday the job market may have peaked in the middle of last year. Officials also expressed concern in meeting minutes about persistent wage gains around 5% and inflation getting stuck above their 2% target. 

Macklem says he will probably leave the 4.5% policy rate in place for a while to slow inflation of about 6% now back to target sometime next year. 

The labor market also faces some underlying changes, including record population growth led by immigration, record participation by women after expanded subsidized daycare and stronger participation by older workers. 

Canada's big job gain follows a U.S. report of 517,000 jobs in January, keeping pressure on the Fed to keep hiking against investor bets for a cut later this year. Some investors in Canada are betting on a rate cut arguing the economy is headed for a recession on weak global demand and faltering spending by indebted consumers. 

Hours worked, sometimes viewed as a proxy for GDP, rose 0.8% in January and were up 5.6% on a year-over-year basis.

MNI Ottawa Bureau | +1 613-314-9647 |
MNI Ottawa Bureau | +1 613-314-9647 |

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