The Canadian economy added 337,000 jobs in February as the reopening of the economy more than offset the job losses in January because of the omicron variant, according to data released by Statistics Canada on Friday.
The unemployment rate dropped to 5.5%, for the first time falling below the pre-pandemic level. Importantly, long-term unemployment fell for the fourth consecutive month.
Overall, February showed exceptional growth and an increasingly tight labour market, reaching several milestones.
February’s jobs rebound was widespread across provinces and industries, with no single province or industry having a net loss in jobs.
Employment reached a record high among core-aged women who are 25 to 54 (84.6%) and a multi-decade high among core-aged men (88.2%). Total hours worked also reached a record, another sign of a tightening job market.
The unemployment rate dropped to 5.5%, for the first time falling below the pre-pandemic level.
The job gains are consistent with the easing of public health restrictions. Accommodation and food services (114,000); information, culture, and recreation (73,000); and retail (21,000) accounted for 70.8% of the overall job gains in the services sectors.
The goods-producing sectors also added 44,000 jobs, mainly because of robust hiring in construction.
Wages on average had a gain of 3.1% on a year-over-year basis as companies increased pay to attract talent. This still lags inflation, which topped 5.1% in January, and the months ahead will tell if wage growth will meet rising inflation.
The recovery in February gave the Bank of Canada ample room to announce its first of an expected series of rate hikes last week. This rate increase might have limited impact on hiring given recent growth.
Uncertainty ahead
While February paints an optimistic picture, it offers little in the forward look. Indeed, uncertainty lies ahead amid intensifying geopolitical conditions abroad.
The conflict will spur growth in the energy and commodities sectors, including agriculture, forestry and mining, as commodities prices skyrocket and shortages beckon.
If Canadian commodities sectors can increase production to fill the newly created gap between global demand and supply, they will not only help provide needed food to the world, but they will also create jobs.
In contrast, the auto industry will take a hit as one supply chain disruption emerges before the previous one recedes. Other businesses will feel the pain of rising energy prices, which could slow the pace of hiring.
The takeaway
It remains to be seen whether the gains in commodities or the challenge of high prices will be stronger, but there will be clear economic winners and losers in the upcoming months.
