(March 13): The Canadian economy lost the most jobs in more than four years last month, driving the unemployment rate up to 6.7%.
Employment fell by 83,900 in February, with losses concentrated in full-time and private sector work, according to Statistics Canada data released on Friday.
That followed a 25,000 employment decrease in January, when the unemployment rate was 6.5%.
Economists surveyed by Bloomberg were expecting employment to rise 10,000, and for the jobless rate to tick up to 6.6%.
February marked the largest decline in employment since January 2022, when Covid-19 public health measures had shuttered the economy.
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“This is a pretty bad report,” Brendon Bernard, economist at Indeed Canada, said on BNN Bloomberg Television. “Everything is coming out pretty soft and we’re seeing declines across a range of sectors.”
The loonie extended the day’s losses versus the US dollar after the release of the jobs report, falling 0.4% to the day’s low of C$1.3696 as of 8.35am in Ottawa.
Canadian bonds rallied across the curve, with the two-year yield down about five basis points to 2.77%. Swaps traders reduced expectations of policy tightening from the Bank of Canada by the end of the year.
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The job losses suggest the labour market remains soft as the economy bears the weight of US tariffs and an upcoming review of the USMCA looms over businesses.
That’s likely to complicate the Bank of Canada’s future path for monetary policy. While Friday’s figures point to mounting economic slack, policymakers must also account for higher oil prices from the ongoing conflict in Iran, which are likely to boost inflation and growth in Canada.
“Further weakness could justify a cut, but spillover from the energy shock, if persistent, on broad prices could justify a hike if sustained,” said Charles St-Arnaud, chief economist at Servus Credit Union, said in an email.
“The bank may face a difficult balancing act down the road,” he said.
The central bank next sets rates March 18, and markets and economists expect officials will hold the policy rate at 2.25%.
On a year-over-year basis, both employment and the jobless rate were little changed.
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Employment losses last month were concentrated among youth aged 15 to 24 years old, and men between the ages of 25 to 54. The youth unemployment rate rose to 14.1%, climbing back towards the recent high of 14.6% recording in September, which was the highest since 2010 outside of the pandemic.
Employment declines were widespread and across both goods-producing and services-producing industries. The largest decrease was recorded in wholesale and retail trade.
The private sector lost 72,600 jobs in February, and employment fell 17,100 in the public sector. A 108,400 decrease in full-time employment was partially offset by a 24,500 gain in part-time work.
Meanwhile, hourly wages for full-time permanent employees rose 4.2% from a year ago, compared with 3.3% in January. Economists surveyed were expecting a 3.2% increase.
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