The country added 336,600 jobs in February, more than offsetting losses from the previous month, the data showed.
Canada’s labor market beat expectations last month after the nation lifted COVID-19 restrictions meant to contain the spread of the Omicron variant.
The country added 336,600 jobs in February, more than offsetting losses from the previous month, Statistics Canada reported from Ottawa on Friday. Economists in a Bloomberg survey had expected a gain of 127,500.
The unemployment rate fell to 5.5%, from 6.5% in January. That is the first time the jobless rate has fallen below its pre-COVID level, and it is now near a five-decade low.
Friday’s report shows the economy is back in front of what the Bank of Canada believes is full capacity and will bolster expectations for up to six more interest rate hikes this year after the central bank began a cycle of hikes earlier this month.
The Canadian dollar rose to 1.2715 Canadian dollars per US dollar and bonds tumbled. Two-year yields rose more than 7 basis points on the day to 1.627% at 8:58am Toronto time.
Tight labor markets have persisted during the Omicron wave, with unemployment rates remaining below pre-pandemic levels in provinces such as Alberta and British Columbia, according to a March 10 report from RBC Economics. Canadian employment is now about 369,000 positions above pre-pandemic levels.
Full-time employment increased by 121,500 jobs in February, while part-time work increased by 215,100 jobs. Full-time job gains more than offset losses in January, while part-time job growth erased cumulative losses suffered over the previous two months.
The country shed some 200,000 jobs in January, ending a seven-month winning streak. Most of the losses were in sectors exposed to the pandemic, such as accommodation and food services, with that industry posting the biggest gain last month, up 12.6%.
Hours worked, which are closely related to output, increased 3.6% in February, surpassing the pre-COVID level for the first time and reaching an all-time high. The monthly increase in hours worked was also particularly pronounced in accommodation and food services, but was still below February 2020 levels.
Year over year, average hourly wages increased 3.1%. Along with the upward trend in wage growth, there have been ongoing increases in the cost of living for Canadians. In January, inflation exceeded 5% for the first time since 1991. February data will be released next week.
“It looks like the labor market is at or very close to full employment,” Royce Mendes, director of macro strategy at Desjardins Securities Inc., said in a report to investors. “As a result, the Bank of Canada will be able to confidently raise rates again next month.”
(Updates with market reaction, details everywhere).
–With the assistance of Erik Hertzberg.