Unemployment rate drops to 7.4 per cent, fuelled by 40,000 people dropping out of workforce
(Reuters) — Canada unexpectedly failed to create any new jobs in February, continuing a trend of stalled employment despite healthy economic growth rates and contrasting with renewed strength in the United States.
The net job losses in the month totaled 2,800 compared with the consensus forecast for gains of 14,500, with the biggest declines in retail and wholesale trade.
The unemployment rate nonetheless dropped to 7.4 per cent in the month from 7.6 per cent in January, largely because 38,000 people dropped out of the workforce, the biggest such move since January 2009.
"This does speak to some of the weakness in the labour market," said David Tulk, chief Canada macro strategist at TD Securities.
"Again, all the easy jobs have been made so we're roughly now waiting for the next dose of stimulus, which we feel will come through a stronger U.S. economy but is unlikely to really filter through until maybe the second half of the year," he said.
Canada had recovered all the jobs lost during the recession by early 2011, but the labour market began to stall in the second half of the year and now lags behind U.S. employment, which has taken flight from a prolonged slump.
The data comes a day after the Bank of Canada issued a more upbeat outlook for the economy but opted to hold its benchmark interest rate unchanged at one per cent. The report supports analysts' view that a rate increase may come sooner than previously expected but is not imminent.
Trade services weak
Statistics Canada said there were 12,000 fewer part-time positions, while full-time jobs grew by 9,100.
The public sector shed 13,400 jobs in the month while private sector payrolls shrank by a milder 1,700 positions.
Employment was weakest in the services industries. In addition to the drop-off in retail and wholesale jobs, there were big declines in transportation and warehousing, health care and social assistance, and public administration.
These were partially offset by a big jump in financial services jobs and more modest gains in education and construction.
Wage inflation slowed in February, according to the indicator closely watched by the Bank of Canada. The average hourly wage of permanent employees rose 2.1 per cent in February from a year earlier, down from 2.2 per cent in January.
