"Overall, and through the monthly volatility, the Canadian labour market still appears quite weak, which should limit the ability of the current oil price shock to widely spread into broader inflationary pressures, enabling the Bank of Canada to hold interest rates at their current level throughout 2026," says CIBC's Andrew Grantham after the release Friday of Canada's LFS employment data for March.
Grantham notes Canadian employment increased in March following two consecutive declines, but he says the rebound was "no better than consensus expectations and failed to bring the unemployment rate lower".
Among highlights, Grantham notes the 14,000 increase in employment was almost exactly in line with the consensus forecast of 15,000, but only partly reversed a cumulative decline of more than 100,000 in the prior two months; the modest increase in employment during March kept pace with labor force growth, and the unemployment rate held steady at 6.7%. By sector, professional services and natural resources, alongside "other" services, led the increases, with those gains partly offset by declines in sectors such as finance and food & accommodation.
Overall job growth was driven by part-time positions, with full-time work unable to recoup any of the ground lost in the prior month, says Grantham.
Despite general softness in most labor market indicators recently, Grantham says hourly wage growth for permanent employees accelerated "sharply", to 5.1%, although he adds that partly reflected base effects from a year ago and the year-over-year rate should ease again in the months ahead.