© Reuters. FILE PHOTO: Downtown buildings along the waterfront are seen from a landing commuter plane in Toronto, Ontario, Canada December 6, 2019. REUTERS/Chris Helgren
By Julie Gordon
OTTAWA (Reuters) -The Canadian economy added far fewer jobs than expected in April but the unemployment rate inched down to new record low of 5.2%, Statistics Canada data showed on Friday, setting the scene for another oversized rate hike by the central bank.
After adding more than 400,000 jobs over the previous two months, Canada added a modest 15,300 net jobs in April, far short of analyst expectations of a gain of 55,000. The increases were entirely in part-time work, as full-time employment fell.
“I would say this is back to normal. If you look at the rise in employment, it’s very close to what you would expect in this economy in ‘normal times’,” said Doug Porter, chief economist at BMO Capital Market Economics.
Still, hours worked fell on the month, largely driven by absences due to illness as another wave of coronavirus infections peaked across Canada.
The average hourly wage of permanent employees also disappointed, rising just 3.4% on the year, down from a gain of 3.7% in March.
While the participation rate inched down, labor force participation hit a fresh high among core-age workers, and the labor market continued to tighten, Statscan said.
“A number of signs have pointed to an increasingly tight labor market in recent months,” Statscan said, noting the number of part-time workers who say they would prefer full-time work has fallen to its lowest level on record.
That tightness is expected to push wage gains up in the coming months and supports the Bank of Canada going ahead with another oversized rate hike on June 1, said economists.
“The slightly weaker-than-anticipated employment reading shouldn’t alter market pricing for a 50 (basis point) hike since the economy is still by most measures overheating,” said Royce Mendes, head of macro strategy at Desjardins Group, in a note.
The Bank of Canada made a rare 50 basis point increase to its policy rate last month, and made clear interest rates will need to go higher. Money markets have fully priced in a second half-percentage-point move in June.
The Canadian dollar was trading 0.3% lower at 1.2871 to the greenback, or 77.69 U.S. cents.