INSTANT VIEW: Canada gains 34,700 jobs in March, jobless rate holds at 5.0%

TORONTO (Reuters) – Canadas economy gained a net 34,700 jobs in March, both in full-time and part-time work and ahead of analyst forecasts, Statistics Canada data showed on Thursday. The jobless rate held at 5.0%, beating forecasts it would rise to 5.1%.

Employment in the goods producing sector fell by a net 40,900 jobs, largely in construction. The services sector was up by a net 75,500 positions, mostly in transportation and warehousing, as well as business, building and other support services.

“It‘s an above-trend number with an unemployment rate of 5%… I think the big picture is just the resilience here because we’ve yet to see the impact of high interest rates slow the labor market, which is problematic for the Bank of Canada in that they really need to see the labor market slow to bring inflation sustainably back to 2%.”

“So it‘s not to say that the impact of high rates won’t be felt in the coming months. But it‘s evident from the employment data that they’re not having a significant impact in the first quarter of 2023.”

The central bank next week at its policy meeting “are going to be on hold, very comfortably. I think they showed us they want to be on hold with the preemptive pause in January. The market is giving them the hold. There‘s a lot of uncertainty around the impacts on U.S. and global growth from the banking issues. I think it’s very easy for the Bank of Canada to say we are on hold.”

ANDREW GRANTHAM, SENIOR ECONOMIST, CIBC CAPITAL MARKETS

“While the Bank of Canada is expected to remain on hold next week, the still low unemployment rate and strong wage growth will likely see policymakers maintaining a bias towards further hikes, rather than hinting at the cuts markets have been pricing in, within the statement.”

ROYCE MENDES, DIRECTOR & HEAD OF MACRO STRATEGY AT DESJARDINS

“The robust employment report suggests that economic momentum seen in January and February continued into March. That said, although the data are inconsistent with the Bank of Canada‘s goal of cooling the labour market and the economy more broadly, the numbers shouldn’t change the modus operandi of the Bank of Canada.”

“Look for policymakers to hold the line next week, leaving the policy rate at its elevated level and quantitative tightening on autopilot, as they wait for tighter monetary conditions to work their way through the economy. Theyll keep the door open to more hikes, but the recent banking sector turmoil raises the bar to unleash any more rate increases.”

DEREK HOLT, VICE PRESIDENT OF CAPITAL MARKETS ECONOMICS, SCOTIABANK

“I like the jobs numbers. I don‘t think it will matter to the Bank of Canada next week. I think they’ve set the script in terms of probably still sticking to their conditional pause. And they‘ve put forward a road map for their balance sheet in (Deputy Governor Toni) Gravelle’s speech.”

“So I don‘t think it’s going to impact anything they are going to do in the near term but it certainly at the margin supports the narrative that the economy remains resilient, were rebounding from the soft patch that we had on GDP in the fourth quarter.”

(Reporting by Fergal Smith, Steve Scherer; Editin by Denny Thomas)