The monthly labor market report from Canada will be coming out later today. Data from Statistics Canada is forecast to show that the economy added 44.1k jobs in April.
The unemployment rate, meanwhile, is forecast to remain steady at 5.8%.
The forecasts point to a possible rebound in the labor market. Jobs were marginally shed during March but the unemployment rate remained steady.
If the unemployment rate comes in at 5.8%, it would mark a fourth consecutive month of no change.
The data comes as the Canadian economy is going through a soft patch with GDP growth faltering in February. This has kept the BoC on the sidelines as it waits patiently for growth to pick up.
Focus will, however, turn to the average earnings report which is closely watched by policymakers. This is because the labor market alone remains the silver lining as far as the Canadian economy is concerned.
Canada’s Job Report – March 2019
The employment figures for Canada came with a surprise drop in March.
The data for March indicates that the strong run in the labor market is cooling off. The economy lost 7,200 jobs. This was below estimates of an increase of 1000 jobs during the period.
But despite the decline in the headline data, employment was seen to be on firm footing. For the first quarter, employment rose by 116,000. For the full year to March, job gains are up 65,000. The dip in March’s data comes on the back of six months of consecutive gains in the labor market.
The goods-producing sector added 1,100 jobs while the services sector shed 8,800 jobs. Full-time jobs also fell by 6,400 on a monthly basis in March.
While the numbers were a bit disappointing, Canada’s unemployment rate held steady at 5.8%. The unemployment rate held at the same level for the past three months, or the whole of the first quarter.
Meanwhile, average earnings grew 2.3% on the year ending in March. This was a modest increase from 2.2% gains from February. Following the release of the labor market report for March, the Bank of Canada held interest rates steady. The central bank acknowledged that the economy was going through a soft patch. While it cut the GDP forecasts, BoC officials were optimistic that growth would pick up during the second half of the year.
What to Expect from the April Jobs Report
The jobs report for April comes as the BoC is currently biding time. There is no doubt that growth has been cooling in the economy. Currently, Canada’s growth has been muted but remains resilient. Question is whether this bleak spell will also drag the labor market lower.
Despite the dip in March, Canada’s labor market remains to be on a firm footing. This could be validated especially if there is a strong rebound in the number of jobs added for April.
Looking beneath the headline figures, however, data suggests that the labor market strength is not equally strong on all fronts.
The labor market could be hit primarily due to shortage of skilled labor. Besides this, global trade uncertainties continue to play a role in influencing economic growth. Despite higher fuel prices, Canada’s energy sector is also struggling, adding to its woes.
This translates to business sentiment taking a hit which could eventually influence the outcome of the jobs report. Sentiment in Canadian businesses has been rolling off the peaks from late last year. Demand prospects are diminishing which could eventually lead to the unemployment rate nudging higher over the course of the next few months.
For the moment, the stable interest rates, at least over the next few months, should help both businesses and households. This could see a pick up in the labor market data until the trade uncertainties are lifted.
With the US and China expected to close the trade talks within the next few weeks, a disappointing jobs report from Canada could be overlooked.