“The headline numbers from most recent Labour Force Survey were strong, but the details were even better. While record low unemployment and wage increases make the case for further rate hikes by the Bank of Canada, other weak economic data and heightened global risks suggest that the Bank will be cautious in tightening policy further.”
Employment rose by 32,300 in March, led by 68,300 new full-time positions.
The unemployment rate remained at 5.8 per cent as labour participation rates remained at their lowest levels since 1999.
Employment grew the fastest in Quebec (+16,000), Ontario (+10,600) and Alberta (+8,300). But, national employment growth was tempered by the maritime provinces, with each posting job losses in March.
Average hourly wages for all employees were 3.3 per cent higher in March compared to last year. This is an acceleration from 3.1 per cent in February. Wage growth was strongest in part-time positions, up 4.5 per cent on the year compared to a yearly gain of 2.7 per cent for full-time workers.
The acceleration in year-over-year wage growth last month was led in large part by public administration, professional services and other services. On the other hand, year-over-year wage growth in goods producing sectors slowed this month.
Provincially, year-over-year wage growth in Ontario accelerated from 3.5 per cent year-over-year in February to 3.8 per cent in March. Wage growth also accelerated significantly in Quebec and British Columbia.
Strong job gains and an acceleration in wages have yet to translate into higher rates of labour force participation. On a year-over-year basis, the labour force participation rate is down 0.3 per cent for those aged 15-24 and is 0.6 per cent lower for those aged 25 to 54. Overall, strong job and wage gains provide an incentive for the Bank of Canada to continue to gradually tighten its policy stance. However, in the past, the Bank has pointed to the possibility to expand our productive capacity by increasing labour force participation. With participation rates still low, the Bank may remain patient as it waits for a rebound in participation rates.