As a result of March, an unexpected decrease in the number of jobs was recorded in the Canadian labor market.
Moreover, in the mentioned country last month, the unemployment rate was the highest in more than two years. The March data indicate that Canada’s economic system is currently in a weakening condition. This state of affairs may become a kind of test for the country’s central bank, which takes a somewhat patient position on the issue of cutting interest rates.
On Friday, April 5, Statistics Canada released data showing that 2,200 jobs were shed in the country last month. The unemployment rate in March was 6.1%. This indicator increased by 1% year-on-year.
The March data was a disappointment for economists surveyed by the media. The experts’ vision of the situation in the Canadian labor market was more optimistic. Economists surveyed by the media predicted that 25,000 jobs would be added in March. They also expected the unemployment rate to be 5.9%.
In March, Canada recorded its first job loss since July last year. The current unemployment rate is the highest since January 2022. It is worth noting that this figure in Canada has not exceeded 6% since 2017, except for the coronavirus pandemic period.
After the data on the labor market situation were published, the Canadian dollar showed a decline, amounting to 1.3645 per US dollar. The yield on the benchmark Canadian two-year bonds was 4.14%, down about four basis points.
Ottawa is currently facing a gradually scaling weakness in the labor market. Against the background of this state of affairs, likely, the Bank of Canada may soon begin to consider the possibility of cutting interest rates. The job losses last month are largely because the pace of hiring turned out to be slower compared to the dynamic of population gains.
Andrew Grantham, an economist at the Canadian Imperial Bank of Commerce, in a report to investors, noted that the cracks that have already been emerging in the Canadian labor market have become a lot wider. According to the expert, positive data on the country’s GDP at the beginning of 2024 pushed back expectations of the first lowering of the cost of borrowing in the markets. At the same time, Andrew Grantham noted that information about the state of affairs in the labor market will again strengthen the mentioned expectations. In this case, it implies the likely first interest rate cutting by the Bank of Canada in June.
As we have reported earlier, US Job Growth Blows Past Expectations.
