The Canadian economy unexpectedly shed jobs in April on the back of a drop in part-time positions, bolstering bets that the Bank of Canada will hold interest rates steady when its policymakers meet later this month.
The decline of 1,100 jobs reported by Statistics Canada on Friday was well short of economists’ forecasts for an increase of 17,400. The unemployment rate was unchanged at 5.8 percent, as expected.
Still, economists said the details of the report were encouraging, with full-time jobs rising and an acceleration in wage growth supporting expectations of another rate increase in July.
“There is nothing about this report that is going to cause the Bank of Canada to rush into a rate hike,” said Andrew Kelvin, senior rates strategist at TD Securities.
“We are still pretty comfortable looking for them to wait until July to lift rates.”
The Canadian dollar pared gains against the greenback immediately after the report.
Markets see a 68 percent probability the central bank will hike in July, which would make for its fourth rate increase over the course of a year.
While most economists expect the central bank to hold fire on May 30, markets are putting nearly 40 percent odds on an increase this month, making for a sizable minority view.
Average hourly wages were up 3.3 percent in April from a year ago, the strongest annual rate since January. The Bank of Canada has been looking for a stronger pickup in wages to confirm the robust job gains Canada saw through 2017.
The bank acknowledged last month that wages have continued to pick up as expected and that it is watching the labor market for signs of remaining slack.
The provinces of Ontario and Alberta have both raised their minimum wages recently.
Nationally, the weakness in job growth last month was driven by a drop of 30,000 in part-time jobs, which offset a gain of 28,800 full-time positions.
By industry, the construction sector lost 18,900 jobs, while the trade sector, which includes retail and wholesale jobs, shed 22,100.
Construction jobs may have been hurt by unusually bad weather in April and could rebound, Andrew Grantham, economist at CIBC wrote in a research note.
The declines were tempered by a 21,300 increase in jobs in professional and scientific services, while the accommodation and food sector added 16,900 jobs.