MNI: Canada Unemployment Near Record Low, Wages Accelerate
Canada's unemployment rate held near a record low in February and wage growth accelerated to 5.4% from 4.5% even as job growth slumped, further evidence of salary inflation the central bank says may test its ability to keep interest rates on hold.
The 5% unemployment rate is just above the record low 4.9% set in June and July, Statistics Canada said Friday from Ottawa. Economists predicted an increase to 5.1%. Job growth of 21,800 also beat the consensus of 2,500, though it's a big slowdown from prior gains of about 150,000 and 69,000.
The Bank of Canada on Wednesday held the policy interest rate at 4.5% after eight previous increases and policymakers said they are likely finished hiking unless inflation remains stubborn. Senior Deputy Governor Carolyn Rogers on Thursday also cited a risk that elevated wage gains may hinder inflation from returning to the 2% target, though the job market may slow as the economy stalls early this year.
The year-over-year wage figures in recent months have also been influenced by comparisons to some of the last major Covid shutdowns that often led to layoffs in lower-paid service jobs. February's 5.4% gain is still in the range of recent elevated figures, like increases of 4.8% in December and 5.8% in November.
Canada’s job market has shown momentum even as GDP stalled in the fourth quarter as firms drew down their inventories, high interest rates continue to slam the housing market and consumer finances are pinched by inflation and higher interest rates. While wage gains have accelerated they have never matched consumer price inflation, now at 5.9%.
Friday's Labour Force Survey showed that hours worked, sometimes viewed as a proxy for GDP, rose 0.6% in February and were 1.4% higher than a year ago.
Statistics Canada’s margin of error in polling for the employment figure is 31,000, meaning the specific job gain reported today isn’t significantly different from zero.
Still, one sign of how hot the job market has been is the 1.9% unemployment rate in Quebec City.