Canada March Employment - Subdued as expected but with a surprise bounce in wages
Canada’s March employment gain of 14.1k is in line with market expectations and not very impressive after a plunge of 83.9k in February that may have been exaggerated by weather. Unemployment was unchanged at 6.7% as expected. There was an upside surprise in wage growth, the hourly rate for permanent employees up by 5.1% yr/yr, versus 4.2% in February.
The wage gain is the highest since July 2024 and unlikely to signal wages making a quick response to higher energy prices. The gain is probably best explained by a mix of volatility and a soft year ago base, though base effects cannot fully explain the extent of the bounce.
Employment detail is weak with full time work falling by 1.1k extending a massive 108.4k decline in February, while part time with a 15.2k rise extended a 24.5k February increase. Private sector employment rose by 15.4k and the public sector by 4.6k, while self-employment fell by 5.8k.
Most of the job gain came from a 10.3k rise in natural resources. It is unclear whether this is erratic or a quick response to higher energy prices. If sustained however, the energy price rise will lift Canada’s energy industry. Manufacturing at 2.5k and construction at 4.0k both saw marginal gains. Services rose by only 1.7k, with a subdued breakdown across the board. The strongest rise was other services at 15.1k and the largest decline 11.2k in finance, insurance, real estate rental and leasing.
The labor force with a 15.1k increase saw a similar change to employment leaving unemployment unchanged. For both employment and the labor force the three month averages are significantly negative though probably understate the true picture. For the labor force however the six month average has turned negative at -6.6k reflecting weaker immigration while the six month average for employment is barely positive at 6.9k.