February saw almost 22,000 new jobs added

Last month, Canada’s employment showed a larger-than-expected increase for the third consecutive month. Such results point to a robust labour market despite forecasts of an economic slowdown and the pause in the central bank’s rate-hike cycle.

According to Statistics Canada, the national economy added 21,800 jobs in February and the unemployment rate remained unchanged at 5%, which is close to a record low level. The main driver of the increase was the private sector. The numbers exceed expectations in a Bloomberg poll of economists for a small gain of 10,000 positions and a jobless rate of 5.1%.

The strong jobs market keeps defying expectations and it could cast a shadow on the Bank of Canada’s decision to pause its interest-rate hiking cycle. However, government yields were down amid broader global concerns about financial challenges at SVB Financial Group.

February results follow increases of 150,000 and 69,200 in January and December, respectively. It was the sixth month in a row showing job creation, which led total employment growth since September to 348,000. This is the first of two labour force polls that will be key resources of data for policymakers before the BoC’s next rate meeting on April 12.

“Following strong January job market numbers, this report is way too strong for the central bank’s comfort. Nothing points to the labour market responding to the aggressive tightening measures of the previous year,” – Douglas Porter, chief economist at Bank of Montreal, noted.

“The economy is probably only one wrong turn in terms of inflation from the Bank returning to its rate-hiking cycle,” – he explained.

On Wednesday, the BoC’s Governor Tiff Macklem kept borrowing costs unchanged for the first time in nine meetings. However, the officials still consider labour market conditions extremely tight and employment growth unexpectedly strong. The Bank is monitoring economic developments thoroughly, including jobs data, in order to assess whether their 4.25% rate increase to 4.5% was enough to cool the economy and reduce inflation.

The recent employment numbers add to quite a confusing picture of the Canadian economy. The economic growth in Q4 turned out to be weaker than expected, although the labour market keeps adding new jobs even amid weakness in such rate-vulnerable segments as real estate.

The report says employment was up in Newfoundland and Labrador, New Brunswick, Prince Edward Island, and Manitoba, but fell in Nova Scotia. Other provinces almost didn’t show any changes.

Statistics Canada will provide February inflation data on March 21, and March jobs report on April 6.