Canada's job market faltered again in March, with hiring down for the second straight month, Statistics Canada said Thursday in a report seen as giving the green light to the Bank of Canada to cut interest rates further.
In March, the Canadian economy shed about 13,300 jobs, the second consecutive month of declines as part-time work continued to dry up.
The jobless rate, meanwhile, edged higher to 7.5 per cent in March from 7.4 per cent a month earlier. The March reading was the highest level since last November.
Economists surveyed by Bloomberg had been expecting to see about 15,000 new jobs created last month. The unemployment rate was seen holding steady at 7.4 per cent.
The combination of the weaker March report and the heightened expectation of another rate cut next week took an immediate toll on the Canadian dollar.
Just before 11 a.m. EDT, the loonie was trading at 75.36 cents (U.S.) down a full cent from Wednesday's closing price.
In February, the economy shed 21,000 jobs, largely because of weakness in part-time hiring.
Since the start of the year, total employment in Canada has declined by about 20,000 positions or 0.1 per cent.
Thursday's report, however, again showed that joblessness was occurring largely in part-time hiring.
Some economists have suggested recent weaker-than-expected reports actually suggest a conversion of this country's employment market from lower paying and more volatile part-time work to full-time employment.
In March, full-time hiring was up again, climbing by 2,900 jobs. That gain, however, was more than offset by the 16,100 decline in part-time employment.
While that composition suggests Thursday's overall report wasn't as weak as the headline number suggested, economists said it still increases the likelihood of at least one more interest rate cut this year.
“The bank still has a green light to trim rates once more next week, and this soft report will do nothing to change that view,” BMO Nesbitt Burns senior economist Douglas Porter said.
“Looking beyond next week's decision, the bank will likely need to see a whole string of reports such as today's to convince them that even more easing is required.”
Others agreed Tuesday's rate call is a tough one.
“While we still believe that the Bank of Canada's decision this week will be a difficult one, the combination of January's weak (gross domestic product) report and two consecutive monthly job losses in February and March will have taken the bank off the fence,” Toronto-Dominion Bank senior economist Marc Lévesque said.
Thursday's report is the last major economic indicator due before the Bank of Canada makes its next decision on interest rates on Tuesday.
The bank's trend-setting target for the overnight rate now sits at 2.25 per cent following a pair of quarter percentage point cuts earlier this year.
The markets have priced in another quarter percentage point rate cut — it would be the third of the year – but until today analysts were less sure, citing the positive impact of stronger U.S. growth on the Canadian economy.
However, most had also said another weak employment report would likely be enough to tip the scales in favour of a rate cut.
Last week, the U.S. economy snapped a long running losing streak with a government report showing that more than 300,000 new jobs were created south of the border in March, helping ease worries that the employment market was being shut out of an otherwise solid economic recovery.
By sector, the biggest declines in March came in the business, building and support services industries reporting a decline of 20,000 jobs. So far this year, hiring in those segments is down by 4.4 per cent, Statscan said.
Hiring in education also declined last month, with about 19,000 jobs being lost, mostly in elementary and secondary schools. March's decrease, however, was largely offset by a gain the month before, leaving employment in the sector little changed from last year's levels.
The information, culture and recreation sector also saw hiring drop in March, with payrolls in those industries falling by 14,000 jobs.
On the plus side, employment rose by 15,000 jobs in the finance insurance, real estate and leasing industries, again reflecting this country's booming housing and real estate markets
Manufacturing employment was little change for the fourth straight month. Since November – when the downward trend in hiring began – employment in that sector has fallen 3.2 per cent.
On a regional basis, employment was down in Ontario, with that province shedding about 25,000 jobs last month. Most of that decline came in the business, building and support service sectors.
In Newfoundland and Labrador, employment was up 4,000 jobs, with the biggest gains coming in the retail and construction sectors.
The rest of the provinces saw little change in terms of hiring in March, Statscan said.
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