MNI DATA IMPACT: Canada Feb Job Gain More Than Double Forecast

Canadian employment expanded at more than double market expectations in February with a 259,200 surge that recouped most of the losses in the prior two months during a second round of health shutdowns, adding to evidence of a resilient economy that may pressure the central bank to scale back asset purchases.

The unemployment rate dropped to 8.2% from 9.4% in January, Statistics Canada said Friday from Ottawa. Economists predicted a gain of 100,000 jobs and a 9.2% unemployment rate. The gains were led by the part-time and hospitality jobs that disappeared again in December and January when local governments imposed new restrictions to clamp down on a second wave of Covid-19.

Retail jobs climbed by about 122,000 in February, still 5.4% below the pre-pandemic level, while accommodation and food service jobs added 65,000 and remains the hardest hit with total employment still one-quarter below where it was a year earlier.

The report also showed a mix of progress on bringing back a normal job market and the deeper challenges that the Bank of Canada has identified as key reasons it's signaled lending rates will be frozen into 2023. The central bank has also said it could scale back QE as it gains more confidence in the recovery.

Total hours worked, which some economists see as a better measure of the economy's output, rose 1.4% in February but remained 3.2% below the year-earlier mark. The labor underutilization rate was the lowest since February 2020 but still elevated at 16.6%. More than one million people remain unemployed or working less than half their usual hours.