MNI: Canada Unemployment Down For 2nd Month On 76K Job Gain
MNI (OTTAWA) - Canadian job growth surged past forecasts for a second month in January led by manufacturing firms seemingly most at risk from Donald Trump's threat of a trade war.
The 76,000 new jobs beat an MNI consensus for 20,000 net new positions and followed December's gain of 91,000. Statistics Canada also said Friday the unemployment rate declined for a second month to 6.6% from 6.7%, still leaving it close to the highest since 2017 excluding the pandemic.
Manufacturing employment rose 33,000 or by 1.8%, though the total was little changed from a year earlier, and there was also a 1.1% rise in professional services. The total job gain was split between about 35,000 full-time jobs and and 41,000 part-time positions.
Factory orders may be getting a boost from a slide in the Canadian dollar, the Bank of Canada's fastest interest-rate cuts in the G7 since June, and U.S. customers stockpiling in case Trump imposes a 25% tariff. Governor Tiff Macklem said Thursday the uncertainty around trade is a drag on growth and investment, and a trade war would do major damage to Canadian exports while adding some upward inflation pressure.
The stronger labor market is helping use up slack in the economy, which is what the central bank wanted in the second half of last year to keep inflation around its 2% target. Friday's job figures showed another helpful trend-- wage growth slowed for a third month to 3.5% from the previous 4%. That's important because of the risk that big wage gains coupled with Canada's moribund productivity would feed into wider inflation pressure.
Another sign of the domestic economy's pickup was the 0.9% rise in hours worked on the month and a 2.2% gain from a year earlier. Economists see hours worked as a proxy for GDP growth, and the 12-month gain is close to the Bank's estimated pace for the first quarter.
The job gain was also significant because it ran ahead of a 61,000 rise in the labor force. The government recently moved to curtail record immigration that economists said had been boosting unemployment.