Canada’s economy unexpectedly shed 1,500 jobs last month, the first fall-back since September that analysts interpreted as a sign growth is moderating from the rapid pace of recent months.
The disappointing report from Statistics Canada was not all bad — full-time jobs shot up by 90,600, hours worked rose a significant 0.5 per cent, and wages increased. Those are all signs the recovery is gaining strength.
As well, the official unemployment rate edged down one-tenth of a point to 7.7 per cent, although that was only because more Canadians stopped looking for work.
On the other side, 92,100 part-time jobs vanished in March, and if self-employment is discounted, the number of employees in Canada fell by 18,900.
Most analysts saw it as a negative signal — although a slight one — given that the economy had been pumping out new jobs at the rate of 38,000 a month since December.
As well, the United States has seen a revival in the labour market this year that many expected to be carried over into Canada, its main trading partner.
“The weaker employment performance is consistent with the view that real gross domestic product in March will be softer than in the prior two months,” said TD chief economist Craig Alexander.
But he added that moderation in growth was expected after a strong fourth quarter wrapping up 2010, and an even stronger start to 2011.
The OECD economic think-tank forecasts the first three months of 2011 will produce a 5.2 per cent jump in economic activity in Canada — the strongest in the G7 — which analysts say cannot be sustained.
The implications for federal political parties campaigning for the May 2 election are likely uncertain. There is enough ambiguity in the numbers that both the government and opposition parties can make a case for their side, said Douglas Porter of BMO Capital Markets.
“Where you stand on this report depends on where you sit,” he said. “It’s definitely a mixed bag.”
While March ended three positive months of job creation, the economy has produced more than 300,000 new jobs in the last year, 251,000 of which were full-time.
Economists were of one mind that the jobs report would also have no impact on next week’s interest rate decision from the Bank of Canada.
Most see the bank keeping the policy rate at one per cent until at least the end of May, and more likely through to July. However, that has not stopped some banks from beginning to hike mortgage rates in advance of a central bank move.
In another economic indicator released Friday, the Canada Mortgage and Housing Corp. said housing starts rose to a better-than-expected 188,800 units annualized in March, with dwellings of multiples such as condos leading the way.
Scotiabank economists said the housing figure was positive but won’t add much to the country’s economic growth, given that multiples are not valued as highly as single dwelling construction.
In March, Statistics Canada said most of the employment gains came in the accommodation and food services sector, up by 36,000 jobs, and construction, up by 24,000.
Meanwhile, 17,000 jobs vanished in the health care and social assistance sectors and 13,000 in public administration. Manufacturing also saw a reversal of fortune, with a decline of more than 9,000 jobs.
The agency said men fared better than older women and youth during the month. Employment among males 25 and over increased by 32,000, while work among women over 55 fell by 17,000, the same number of jobs decline that occurred among youth aged 15 to 24 years old.
Regionally, the big change was in Quebec, where 14,700 jobs were lost during the month. Prince Edward Island saw a significant pick-up relative to its population of 1,400. In Ontario, 63,000 new full-time jobs were mostly offset by the loss of 58,000 part-time employment