MNI: Canada Jobs -83.9K, Full-Time Dip Most Since `09 Ex-Covid

Canadian employment unexpectedly plunged in Februar, the biggest fall in full-time work since the 2009 recession excluding the pandemic era complicating the outlook for a central bank managing sluggish growth and higher gasoline prices.

Payrolls dropped by 83,900 following January's 24,800 decline according to Statistics Canada's report Friday, in a month where an MNI consensus called for a gain of 10,000. The unemployment rate also rose to 6.7% from 6.5%. 

Full-time work accounted for the entire net job loss in February with a 108,400 decline while part-time work rose 24,500. Total employment has climbed just 0.2% over the past 12 months, the slowest pace since 2016 again excluding the pandemic, reflecting pain from U.S. tariffs.

Manufacturing employment has fallen 2.8% over the last year, and a separate StatsCan report showed factory sales down 3% in January including a 39% drop in autos amid longer-than-normal seasonal shutdowns for retooling and preparing new models. 

POLICY DILEMMA

Job market weakness adds to other signs of strain such as a decline in fourth-quarter GDP and Donald Trump's threats of ripping up a free trade deal with Canada. Bank of Canada Governor Tiff Macklem cut interest rates four times last year and has said he can hold borrowing costs unless there is a major new shock to the economy. Most economists see him on hold this year though some cite a potential need for a cut on continued trade pressure or a possible hike if the Iran conflict drives inflation higher.

The Bank's prime goal is keeping inflation at 2% but officials look at the job market as an indicator of slack. Unemployment is rising again at a time when the government's move to curb record immigration is shrinking the labor force. That shift to foreign workers leaving Canada has not benefited young workers so far, with their jobless rate up 1.3 percentage points to 14.1% in February and jobs down about 47,000.

By one measure the job market has shown resilience. StatsCan noted that when Canada's unemployment rate is adjusted to U.S. concepts it has been unchanged since the start of last year at 5.6%, while America's rate has climbed from 4% to 4.4%.