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Tags: Canada | Job | Growth

Canada's Job Growth Jumps Past Expectations in January

Friday, 04 February 2011 10:19 AM EST

Canadian job growth surged past expectations in January, with the economy officially recouping all the jobs lost in the recession, underscoring that its recovery is on track even as the U.S. labor market struggles.

Statistics Canada data Friday showed the economy added 69,200 new positions, far more than the 15,000 markets had expected. The unemployment rate, which had been forecast to remain unchanged, grew to 7.8 percent from 7.6 as more people looked for jobs.

The gain was the largest since April 2010. The Canadian dollar pushed to a 2 1/2-year high after the news as analysts were heartened by the healthy economic picture, though they continue to expect the Bank of Canada will leave rates steady in the near term.

"This is a strong report through and through," said David Tulk, chief Canada macro strategist at TD Securities in Toronto.

Canada has now added just under 100,000 jobs in the last two months. Canada had been thought to have already regained the jobs wiped out by the recession until a data revision last week showed the amount of new hires fell short.

The number was in stark contrast to data south of the border where U.S. employment rose far less than expected last month, although the unemployment rate fell to its lowest level since April 2009.

The Canadian employment gain in January was evenly split between full- and part-time positions. The service sector added 49,400 jobs, with particular strength in business, building and other support services.

"You look at the composition of jobs that were very evenly split between full-time and part-time, public sector and private sector — all just very good numbers," said Tulk.

 

BANK ON HOLD

Even so, analysts said it did not change their view that the Bank of Canada will leave interest rates unchanged at 1 percent in the short term.

"The Bank of Canada will probably take some encouragement from this report, though they'll want to see indications of the strength being sustained, as well as translating into stronger overall growth," said Paul Ferley, assistant chief economist at Royal Bank of Canada in Toronto.

The average hourly wage of permanent employees — which is closely watched by the central bank for inflation pressures — rose 2.3 percent from January 2010, the same year-on-year rate as in December.

Tulk said the modest increase also suggested the bank will stand pat for now.

Overnight index swaps, which trade based on expectations for the key central bank rate, showed investors see a 96.7 percent probability rates will stay on hold at the Bank of Canada's next rate announcement on March 1. This compared with 99.08 percent before the data.

A Reuters poll last month showed primary dealers expect interest rates will rise this year, though the timing of the first hike remains in question.

The Canadian dollar jumped on the news, rising to a session high of C$0.9845 to the U.S. dollar, or $1.0157, up sharply from C$0.9890 just before the data was published. The currency extended gains following the U.S. jobs report.

Money market rates and bond yields also rose on the data.

© 2023 Thomson/Reuters. All rights reserved.


Markets
Canadian job growth surged past expectations in January, with the economy officially recouping all the jobs lost in the recession, underscoring that its recovery is on track even as the U.S. labor market struggles. Statistics Canada data Friday showed the economy added...
Canada,Job,Growth
514
2011-19-04
Friday, 04 February 2011 10:19 AM
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