OTTAWA – The Canadian economy disappointed in February, creating a smaller than expected 15,100 new jobs that included an outright decline in full-time work.
The tiny pick-up overall, all part time jobs, was below the consensus expectation for as many as 25,000 new jobs, but large enough to keep the unemployment rate at 7.8 per cent..
Analysts looking at the national situation saw the jobs picture as a glass half empty.
CIBC economist Emanuella Enenajor characterized the news as “disappointing, but not alarming.”
“Although the magnitude and quality of job creation this month fell short of expectations, the three-month trend still suggests that the health of the jobs market is improving, with an average of 38,000 jobs created over that period.”
But Scotiabank’s Derek Holt noted the devil in the details. Part-time employment accounted for all the gains and more, increasing by 38,900 during the month. The private sector shed 20,000 jobs, and the number of employees in Canada, as opposed to those self-employed, declined by 10,400.
As well, hours worked fell 0.25 per cent, which will detract for gross domestic product growth this quarter.
“It’s not that 15,000 is cause to turn up one’s nose … (but) the details are worse than the headline,” Holt noted. “This comes on the heels of yesterday’s sharp erosion in January’s real trade deficit that dings month GDP and will cause downward revisions to December’s GDP.”
He said the Bank of Canada will look on this as a dovish report and will see no urgency to start hiking interest rates soon.
More had been expected of the economy during the month, especially after the strong 69,200 gain in January and signs of strength in other economic indicators, including the gathering momentum in the U.S. that is normally a good indicator for Canada.
Instead, the economy put in the worst jobs performance in three months, with full-time employment falling by 23,800. The majority of the losses came in the business, building and other support services group.
Statistics Canada noted that of the 322,000 jobs created over the past 12 months, more have been part-time jobs than full-time.
Last week, the U.S. government reported the country added 222,000 private sector jobs, the first time in months the U.S. has outperformed Canada on employment gains.
The lacklustre report came as Finance Minister Jim Flaherty was to meet with private sector economists for the last time before the March 22 budget.
The analysts were expected to upgrade their earlier call for economic performance this year by about half-a-point from the 2.4 per cent January consensus, although the jobs data might persuade Flaherty to insert a prudence factor in the forecast, as he did last year.
However, the Royal Bank made clear it was not backing down from it’s for a 3.2 per cent advance and stayed firm on the chart-topping prediction with a new report Friday.
“In part, the economy’s sustained strength stems from our view that U.S. demand for Canadian exports will firm this year while import growth eases,” the RBC said.
“Key assumptions in this forecast are that the rebound in motor vehicle demand that is currently underway will continue and that demand for commodity-related products will remain robust.”
In February, employment gains were concentrated in the health care and social assistance group, which added 18,000 jobs, and accommodation and food services, which saw a pick-up of 15,000.
Meanwhile, the business, building and other support services category shed 35,000 jobs in February, while employment in public administration fell by 14,000.
Regionally, Alberta was the only province in Canada with a notable employment gain of about 14,000, while Ontario and Saskatchewan experienced small declines.