Morning Market Brief: March 12, 2024

Canada’s economy keeps adding jobs?

Data released last Friday showed Canada’s economy added jobs for a seventh straight month. While the labour market remains relatively robust, underlying data points to some slowing conditions in the labour market. Population growth has been helping to fuel the labour market recently, which might be inflating the headline figures.

• Canada’s economy added 40,700 jobs in February, adding to the 37,300 job gains in the previous month. February’s total was also above economists’ expectations, based on a Bloomberg survey of economists.
• The full-time sector added jobs over the month, while the part-time sector lost jobs. The accommodation and food services industry added a relatively high number of jobs over the month, as did the technical services industry.
• This was the seventh consecutive month of job additions. However, most economists caution that the growth in jobs is largely the result of population growth. There are more persons willing to take available jobs. Conversely, there hasn’t been a significant jump in new jobs available.
• Canada’s unemployment rate edged higher to 5.8% in February from 5.7% in January. Wages continued to advance at a quick pace, rising by 4.9% year-over-year in February. Strong wage gains have added to inflationary pressures.
• The US also reported its labour market data on Friday. The US economy added 275,000 jobs in February, but the unemployment rate rose to 3.9%. Many Americans started looking for work but were unable to immediately find a job.

While the headline figures appear rather appealing, there are some signs of Canada’s labour market slowing. A prolonged slowdown in labour market conditions, combined with lower inflationary pressures, could have the Bank of Canada considering a rate reduction this year. Equity markets are pricing in rate cuts in 2024, but markets have seen some volatility with expectations of rates likely staying higher over the first half of the year.

At?CIBC Private Wealth, we aim to take a comprehensive approach to managing, building and protecting your wealth. If you'd like to discuss this market and economic update in more detail, please get in touch with your advisor any time.