Canada’s job growth remained subdued in March while the unemployment rate held steady at 6.7% from the prior month, data showed on Friday, signaling continued slack, or underutilized workforce, in a labor market feeling the hit from U.S. tariffs.
Employment in March rose by a net 14,100 jobs after a slump of 83,900 in the prior month, Statistics Canada said.Â
This was the first job gain this year, though the increase was modest and nowhere near enough to offset 109,000 total job losses in the first two months of the year.
Analysts polled by Reuters had forecast job gains of 15,000 in March and expected the unemployment rate to edge up to 6.8%.
Canada’s economic momentum has weakened over the past year following a wave of U.S. tariffs on key sectors including steel, aluminum, autos, copper and lumber. While the economy has so far avoided a recession, the fallout has led to layoffs in trade-exposed industries and subdued hiring elsewhere.
The inflationary effects of the war in the Middle East and uncertainty around a review of a free trade deal with the U.S. also loom heavily on the economy.Â
The unemployment rate among the core-aged workforce of 25-54 year-olds and among youth remained unchanged in March from February.
While unemployment in Canada continues to be elevated, economists predict this will gradually ease as population growth cools.
“The big-picture take-away is that job growth has been quite modest over the past year — but so, too, has been the growth in the available labour force, holding the unemployment rate steady,” said Doug Porter, chief economist with BMO Capital Markets. Â
Part-time jobs drove all the job gains in March and increased by 15,200, while full-time jobs dropped by 1,100, the statistics agency said.
Lower full-time work and a high unemployment rate are indicators of slack in the economy and the Bank of Canada closely watches these for its monetary policy decision.Â
Another closely tracked indicator is the average hourly increase in permanent wages. The measure showed wages rose by 5.1% in March on a year-on-year basis, its highest in the last 20 months.Â
Porter said the sharp rise in wages would draw the BoC’s attention as it was already on high alert for signs of any spillover from higher energy prices to broader inflation.
The goods-producing sector, which is the most exposed to U.S. tariffs, saw employment increase by 12,500 jobs while the services sector, where four out of every five people are employed in Canada, reported a modest 1,700 job gain.
This is the last labor force data before the BoC’s monetary policy decision later this month. Money markets are pricing in no change in policy rate but betting on one 25-basis-point increase later in the year.
The Canadian dollar pared losses and was trading down 0.05% to C$1.3821 against the U.S. dollar, or 72.35 U.S. cents. Yields on the two-year government bonds were down 0.8 basis points after the jobs data to 2.514%.
(Reporting by Promit Mukherjee; Editing by Dale Smith, Toby Chopra and Deepa Babington)
