OTTAWA: Canada’s unemployment rate fell to 5.3% in March, the lowest level on record, highlighting the tightening of the country’s labor market, Statistics Canada data showed on Friday, with the economy adding a net 72,500 jobs.
The job gain was slightly below analyst predictions of 80,000, while the unemployment rate met expectations. The average hourly wage of permanent employees rose 3.7%, up from a 3.3% gain in February.
“We’re beyond full employment. We’re seeing the market heating up, and that shows with the wage growth,” said Jimmy Jean, chief economist at Desjardins Group.
Employment growth continues to outpace population growth, leading to tighter labor markets, Statscan said. Since September 2021, Canada has added 463,000 jobs, but just 236,000 new working age people.
Job gains were entirely in full-time work, partially offset with a slight decline in part-time work. Employment rose in both the services sector and the goods sector, led by accommodation and food services and construction.
Canada’s employment rate, a ratio that accounts for population growth and not just net job gains, hit its pre-pandemic level for the first time in March.
By comparison, the employment rate in the United States is still 1.1 percentage points below its February 2020 level, Statscan said.
Economists said the jobs data continues to support the Bank of Canada raising its policy rate by a half point to 1% when it meets next week.
“Today’s figures may not be as dramatically strong as the prior month, but they are still solid enough to support calls for a 50 basis point hike,” said Andrew Grantham, senior economist at CIBC Capital Markets.
A record number of Canadian businesses say intense labor shortages and ongoing supply chain issues are hurting their ability to expand capacity to meet booming demand, according to a central bank survey this week.
The Canadian dollar steadied at 1.2588 to the greenback, or 79.44 U.S. cents after the jobs data, nearly unchanged on the day.