Friday, June 14, 2024

Average hourly wage in Canada now $34.95: StatCan

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Canada’s economy added five times the number of jobs that were forecast for April and the unemployment rate unexpectedly held at 6.1 per cent, data showed on Friday, dampening market bets for a June rate cut.


The economy added a net 90,400 jobs while analysts polled by Reuters had forecast a gain of 18,000 jobs and the unemployment rate to rise to 6.2 per cent.


The gains – largest since the 110,000 jobs added in January 2023 – were a mix of part-time and full-time work, and entirely in the services-producing industries, data from Statistics Canada showed.


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Analysts said the data might prompt the Bank of Canada (BoC) to think twice about when to start cutting rates from their current 23-year-high of five per cent.


Money markets trimmed their bets on a June rate cut to 48 per cent from 54 per cent. They are now fully pricing in a cut in September compared to July before the report was released.


“Certainly this raises the bar for a very near-term rate cut and I think it speaks to how the balance of risks really does support the Bank of Canada potentially waiting until July,” said Andrew Kelvin, chief Canada strategist at TD Securities.


The Canadian dollar strengthened 0.3 per cent to $1.3640 to the U.S. dollar, or 73.31 U.S. cents.


The average hourly wage growth for permanent employees slowed to an annual rate of 4.8 per cent from five per cent in March. The wage growth rate – closely tracked by the BoC because of its effect on inflation – is now the slowest since it dipped to 3.9 per cent in June.


The slowdown in wages adds to signs that the economy is moving in line with the BoC’s projections.


Doug Porter, chief economist at BMO Capital Markets, said the jump in employment was not a total surprise, given healthy Canadian population growth.


“It’s not quite the clear cut story for the Bank of Canada that the headline job number would suggest. It would definitely give the bank pause if they were leaning to cut but I still think the real heavyweight indicator here is the next inflation reading (on May 21),” he said by phone.


The bank is looking at a broad range of indicators for evidence that inflation is heading toward a two per cent target, and said last month that a rate cut in June was possible if a recent cooling trend in prices is sustained.


Stephen Brown, deputy chief North America economist at Capital Economics, said the strong numbers gave the Bank of Canada time to see whether inflation would continue falling.


“That makes it more likely the Bank will wait until the late July meeting to cut interest rates, as there are three (inflation) reports ahead of that meeting but just one before the early June meeting,” he said in a note.


Friday’s jobs report showed that employment in the services sector increased by a net 100,700 jobs, led by professional, scientific and technical services as well as accommodation and food services. The goods sector lost a net 10,400 jobs, mostly in construction and agriculture.


The employment rate, or the proportion of the population who are employed, also held steady at 61.4 per cent in April, after six consecutive months of declines, StatCan noted.


(Additional reporting by David Ljunggren in Ottawa, Rod Nickel in Winnipeg and Fergal Smith in Toronto;Editing by Dale Smith, Philippa Fletcher and Ros Russell)

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