Canada added just 1,100 jobs in February, raising expectations for a rate cut ahead of the Bank of Canada's decision
Canada’s economy added only 1,100 jobs in February, well below the 20,000 expected by economists, according to Statistics Canada.
The unemployment rate remained at 6.6 percent, while the employment rate held steady at 61.1 percent.
As per Financial Post, the modest job gains come ahead of the Bank of Canada’s next interest rate decision on March 12, with expectations of a rate cut increasing.
As per LSEG Data & Analytics, financial markets were largely tilted toward a quarter-point cut.
According to Andrew Grantham, senior economist at CIBC Capital Markets, February’s weak hiring data, combined with concerns over the economic impact of trade uncertainty, should push the Bank of Canada toward another rate cut.
However, economists at RBC believe it will be a close call, with assistant chief economist Nathan Janzen estimating the odds at 50-50.
According to David Rosenberg, founder and president at Rosenberg Research & Associates Inc., the probability of a rate cut has risen significantly.
“Bank of Canada rate cut odds for next week’s meeting have gone from 50 percent last week, to 76 percent yesterday, to 85 percent now,” he said in a note to clients, as per Financial Post.
As per Statistics Canada, employment in retail and wholesale trade increased by 51,000 jobs, while the finance, insurance, real estate, and rental leasing sector saw gains of 16,000.
However, employment in professional, scientific, and technical services declined by 1.6 percent. The transportation and warehousing sector also recorded a 2.1 percent drop in February, bringing its year-over-year decline to 2.6 percent.
Statistics Canada also reported that private sector employment remained unchanged in February after increases in December and January. Public sector and self-employment figures also held steady.
According to BNN Bloomberg, February’s slowdown followed the addition of 76,000 jobs in January.
Harsh winter weather contributed to weaker labour market conditions, with 429,000 Canadians losing hours of work due to major snowstorms in Central and Eastern Canada.
This figure was more than four times the five-year February average. Total hours worked fell by 1.3 percent, marking the largest decline since April 2022.
TD Bank director of economics James Orlando attributed the weak labour market results to winter weather but also pointed to concerns over impending US tariffs.
“Luckily, the Canadian labour market came into the current tariff crisis on solid footing, which is important given the significant headwinds the economy is facing,” he said in a note to clients.
As per BNN Bloomberg, the US implemented new tariffs on March 4, with more trade measures potentially on the way.
In response, the Canadian government announced a $6bn support package to assist businesses affected by US trade disruptions.
According to Brendon Bernard, senior economist at Indeed, while there is “potential trouble ahead for the job market,” February’s data did not indicate widespread layoffs in anticipation of trade tensions.
Statistics Canada reported that the manufacturing industry, which had led job growth in January, contracted by 4,800 positions in February.
However, Ontario defied the trend, adding 10,800 manufacturing jobs.
According to Bernard, the manufacturing industry serves as a key indicator of potential tariff impacts.
Although employment data does not yet show job losses in the sector, Indeed job postings for manufacturing and production roles fell by 7 percent in February, indicating a possible slowdown in hiring.
“The clouds are still, I think, on the horizon, rather than the storm raging today,” he said.
