By Kelsey Johnson
OTTAWA (Reuters) – Canada gained a higher-than-expected 30,300 net jobs in February while the unemployment rate rose to 5.6%, official data showed on Friday, but analysts said the data was unlikely to trigger a rethink at the Bank of Canada as it tries to shield the economy from the effects of a coronavirus outbreak.
Analysts in a Reuters poll had forecast a gain of 10,000 jobs in February and an unemployment rate of 5.6%. Wages for permanent employees – a metric watched closely by the Bank of Canada – rose by 4.3%, Statistics Canada said.
Canada’s central bank slashed a key interest rate on Wednesday by half a percentage point, the most in more than a decade, in light of the coronavirus outbreak and said it was prepared to ease further if needed. Money markets are anticipating another rate cut in April.[BOCWATCH]
“This report isn’t going to matter much for upcoming Bank of Canada policy decisions,” said Robert Both, a macrostrategist for TD Securities, despite the stronger-than-expected labor numbers.
“Broader market sentiment, especially around spread of coronavirus, is going to weigh much more heavily on upcoming decisions.”
The Canadian dollar <CAD=D4> weakened slightly to 1.3418, or 74.52 U.S. cents after the jobs report.
All the gains were in full-time jobs, Statscan said. Canada’s goods-producing industries gained 5,600 net jobs, largely on manufacturing, which offset declines in the construction and natural resources industries.
The services sector saw an increase of 24,600 net positions, primarily on gains in the wholesale and retail trade sector.
Bank of Canada Governor Stephen Poloz said on Thursday Canada’s overall healthy labor market continued to be a good source of resilience even as an outbreak of coronavirus could seriously test Canada’s economy.
“It does show that the economy actually did have a bit of momentum heading into the heavy weather of the coronavirus,” said Doug Porter, chief economist at BMO Capital Markets. “It gives some credence to the view that the economy could or can recover after the storm passes.”
Meanwhile Canada posted a wider-than-expected trade deficit of C$1.47 billion ($1.10 billion) in January as exports fell, data in a separate Statscan release showed. Analysts polled by Reuters had forecast a shortfall of C$830 million.
Statscan also said it was monitoring the possible impacts of the coronavirus outbreak on Canada’s international trade data, where the agency said “substantial decreases in exports and imports with China” had already been observed in January.
(Reporting by Kelsey Johnson in Ottawa; Editing by Dale Smith and Steve Orlofsky)