Canada’s employment numbers for March smashed expectations this morning, adding 303,000 new jobs when economists were only expecting 101,500. The addition brought the unemployment rate down to 7.5%, much lower than the expected 8%.
The March release this morning follows a strong February print, which recouped the job losses from the prior two months.
The Canadian dollar advanced modestly against its US counterpart immediately after the release, but ceded some of those gains and is only modestly higher on the session. It remains one of the top performing currencies on the year.
As lockdown measures were relaxed across the country in March, provinces that enacted the strictest measures experienced the greatest increases. Ontario and Quebec saw healthy job growth, with the primary drivers coming from jobs in retail trade and accommodation and food services.
A core indicator of labour market is the total hours worked, which increased 2% for March. This metric plays an important role as it not only captures those who are employed, but also to what extent are these individuals working full time hours, and thereby can spend a full-time earner’s wage. The March increase was driven by gain in educational services, retail trade and construction. With these gains, the total hours worked sits just 1.2% off from its pre-pandemic levels.
The unemployment rate now sits within 1.5 percentage points of the February 2020 reading, the month just prior to the yearlong economic shutdown. Nationwide, Canada is only about 300,000 jobs lower than pre-pandemic levels.
Traders place a lot of emphasis on the jobs report because of its importance of the consumer being the main driver of economic growth, and the fact that the numbers are released shortly after month end, making the data timely and relevant.
Job creation is an important leading indicator of consumer spending and broader economic activity because consumer spending accounts for approximately 57% of the Canadian economy.
From a macro level, the trend seems pronounced, but as we just saw in Ontario earlier this week, some provinces are still issuing province-wide stay at home orders as new variants pose imminent risks to citizens residing in the area. That will likely, at least temporarily, roll back some of the employment gains in March.
Only once we have all provinces moving in lock step can we confidently put the pandemic in our rear-view mirror. Until then, surprises causing short-term volatility are likely to persist.
Business Development Manager, Canada & Currency Analyst
“Cambridge Global Payments” is a trade name, which in this document refers specifically to one or more of these legal entities: Cambridge Mercantile Corp., Cambridge Mercantile Corp. (U.S.A.), Cambridge Mercantile Corp. (Nevada), Cambridge Mercantile (Australia) Pty. Ltd.
Cambridge Global Payments (“Cambridge”) provides this document as general market information subject to: Cambridge’s copyright, and all contract terms in place, if any, between you and the Cambridge entity you have contracted with. This document is based on sources Cambridge considers reliable, but without independent verification. Cambridge makes no guarantee of its accuracy or completeness. Cambridge is not responsible for any errors in or related to the document, or for damages arising out of any person’s reliance upon this information. All charts or graphs are from publicly available sources or proprietary data. The information in this document is subject to sudden change without notice.
Cambridge may sell to you and/or buy from you foreign exchange instruments (including spot and/or derivative transactions; both kinds are here called “FXI”s) covered by Cambridge on a principal basis.
This document is NOT: 1) Advice of any kind, or 2) Approved or reviewed by any regulatory authority, or 3) An offer to sell or a solicitation of an offer to buy any FXIs, or to participate in any trading strategy.
Before acting on this document, you must consider the appropriateness of the information, based on your objectives, needs and finances. For advice, you must contact someone independent of Cambridge.
Certain FXIs mentioned in this document may be ineligible for sale in some locations, and/or unsuitable for you. Contact your Cambridge representative for further information regarding product availability/suitability before you enter into any FXI contract.
FXIs are volatile and may cause losses. Past performance of a FXI product cannot be relied on to determine future performance.
This document is intended only for persons in Canada, the US, and Australia. This document is not intended for persons in the UK or elsewhere in the EEA. In Australia, this publication has been distributed by Cambridge Mercantile (Australia) Pty. Ltd. (ABN 85 126 642 448, AFSL 351278); for the general information of its customers (as defined in the Corporations Act 2001). This entity makes no representations that the products or services mentioned in this document are available to persons in Australia or are necessarily suitable for any particular person or appropriate in accordance with local law.
Fees may be earned by Cambridge (and its agents) in respect of any business transacted with Cambridge.
The document is intended to be distributed in its entirety. Unless governing law permits otherwise, you must contact the applicable Cambridge if you wish to use Cambridge services to enter a transaction involving any instrument mentioned in this document.
© Copyright 2018, Cambridge Mercantile Corp., ALL RIGHTS RESERVED. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of Cambridge Mercantile Corp. See www.cambridgefx.com for contact details.