Canada Job Growth Slows in April; Jobless Rate Falls

By Paul VieiraFeaturesDow Jones Newswires

Employment growth in Canada decelerated in April while the jobless rate fell to its lowest level in nearly nine years as fewer people, in particular younger people, looked for work.

Meanwhile, the average hourly wage paid to Canadian workers rose at its slowest pace on record in April versus a year ago. The Bank of Canada has flagged subdued wage growth as a source of concern and a sign the economy has more room to grow before it hits its potential.

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The employment figures likely reinforce the central bank's view that material slack remains in the economy, and hence it is appropriate to keep its main interest rate, currently at 0.50%, unchanged for now even though activity has picked up in recent months.

The Canadian economy added a net 3,200 jobs in April, Statistics Canada said Friday. Market expectations were for a gain of 10,000 positions, according to economists at Royal Bank of Canada. April marked the fifth straight month Canadian employment rose.

The country's unemployment rate fell to 6.5% in April from 6.7% in the previous month, to the lowest level since October 2008. The data agency attributed the fall in the unemployment rate to 45,500 people leaving the labor force, the biggest such decline in nearly two decades. The April drop also largely reversed a labor-force gain in the previous month of 47,000.

Average hourly wages rose 0.7%, which the data agency said was the slowest annual increase dating back to 1997, when Statistics Canada started to collect wage figures for its closely watched labor-force survey.

Bank of Nova Scotia economist Derek Holt said the wage figures were "probably the most disconcerting aspect of the [jobs] report." He said when adjusted for inflation, which rose 1.6% in March on annual basis, "the average Canadian's pay check is falling and by a material amount."

Mr. Holt said this should dismiss any talk of any interest-rate increase from the Bank of Canada. He added this signals weakness ahead for retailers, and is likely to weigh on core inflation which continues to be well below the central bank's preferred 2% target.

The U.S. released its jobs report at the same time as Canada does. The U.S. report showed nonfarm payrolls rose by a seasonally adjusted 211,000 in April and the unemployment rate fell to 4.4%, or the lowest level since May, 2007.

Using U.S. data concepts, Canada's jobless rate in April was 5.5%, or unchanged from the previous month.

In its most-recent rate decision, the Bank of Canada said material slack, or unused capacity, was prevalent in the Canadian labor market, whereas indicators in the U.S. suggested the world's biggest economy was close to full employment.

Canada's central bank said the country's jobless rate has remained largely steady since the end of 2014, and the job-vacancy rate hasn't materially changed in more than two years. This can be explained partly by the fallout from the commodity-price swoon, which led to a deterioration in Canadians' purchasing power.

Further, Bank of Canada officials say growth in hours worked has been relatively weak compared with the U.S., even amid better employment reports. The April jobs report said hours worked rose 0.3% on a month-over-month basis and 1.1% from a year ago.

The Bank of Canada has signaled its intent to keep its main interest rate unchanged for the foreseeable future, warning that uncertainty over U.S. trade policy represents a significant threat to growth that outweighs a recent uptick in economic activity.

Economists were expecting some payback in the Canadian jobs data, as growth in employment was on a breakneck pace. Even with the April figures, job growth over the past six months has averaged 22,000 a month, with all of the gains in the full-time category.

April's report marked the first time since November that full-time employment declined in Canada. Full-time jobs fell 31,200 in April, but part-time employment rose 34,300.

Further, the data indicate the private sector shed 50,500 jobs, while the public sector added 35,200 positions. The ranks of the so-called self-employed, which tend to be independent contractors, rose 18,500, and the level of employees at firms receiving pay on a regular schedule fell by 15,300.

Write to Paul Vieira at

(END) Dow Jones Newswires

May 05, 2017 10:19 ET (14:19 GMT)