Canadian Employment Soared In February

Canadian employment soared 50.7K in February according to the Labour Force Survey (top chart). That was miles above consensus expectations which were at +8K. The unemployment rate, however, was unchanged at 7% as the impact of the job gains were offset by the one-tick increase in the participation rate to 66.7%. There were job gains in both public (+9.4K) and private sectors (+29.2K). Paid jobs, total less self-employeds, increased 38.6K. All of the job gains were in the services sector (+59.3K) with healthy contributions from trade (+13.2K), professional services (+26.2K), and accommodation (+21.1K). The goods sector lost 8K jobs with declines in manufacturing (-25.6K), and natural resources (-6K) more than offsetting gains in construction (+15.8K). Full time employment rose 34K in February, which helped boost hours worked by 0.4%.





OPINION: The LFS February report was stellar, with healthy job gains in the private sector, most of which are full-time. With two months of data, hours worked are now tracking roughly +2% in Q1, consistent with a rebound in GDP growth after a weak Q4. That said, one has to be cautious when interpreting the LFS. While the February report suggested an employment boom, it’s worth noting that LFS also showed a jobs boom in the second half of last year when the economy in fact stagnated. The February LFS gains further increases the divergence between that survey and the Survey of Employment, Payrolls and Hours (SEPH - a poll of establishments which lags the LFS by a couple of months) which was more consistent with economic realities of the second half of last year. We still expect the LFS to move towards the SEPH eventually. But statistical reasons aside, there are other concerns facing the Canadian labour market. A soft economy is likely to turn even softer later this year, particularly with provincial governments tightening fiscal policy, something that’s likely to result in job cuts - particularly in the public sector.