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Canada’s Job Numbers Surge in March, Almost Returning to Pre-Pandemic Levels

by Adam Corbett | April 9, 2021

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.

Adam Corbett
Business Development Manager, Canada & Currency Analyst
acorbett@cambridgefx.com

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