The Canadian economy unexpectedly shed 2,200 jobs in March, while forecasters in an Econoday survey had anticipated employment to rise 25,000. The unemployment rate rose to 6.1 percent from 5.8 percent in February, the highest level since January 2022, above expected. The participation rate remained steady at 65.3 percent. Total hours worked in March were virtually unchanged in the month.

The poor labor market performance wasn't offset by easing wage inflation. To the contrary, unadjusted average hourly wages were up 5.1 percent year-over-year, up from 5.0 percent in February.

While the headline number brought down Econoday's Relative Performance Index to 8, indicating a slightly outperforming economy, the wage data support a stable-for-longer stance for monetary policy rates.

Both full-time and part-time employment suffered in March, with losses of 700 and 1,600, respectively. The number of employees increased 27,000, with the private sector adding 15,200 jobs and the public sector 11,900. Self-employment, on the other hand, fell 29,300 on the month.

The sector breakdown was a tale of two stories, with goods-producing industries creating 29,900 jobs while services employment fell 32,000.

Within services, accommodation and food was down 26,600, wholesale and retail trade cut 23,100 positions, and professional, scientific and technical services lost 19,900 jobs. On the upside, health care and social assistance rose 39,900, and finance, insurance, real estate, rental and leasing increased 11,000.

Within goods-producing industries, employment increased in four of the five main categories. The largest gains were in construction, with 15,300 jobs created, and manufacturing, with 9,300 jobs. Agriculture was down 2,500.

Employment in March is expected to rise 25,000 versus February's 40,700 which well exceeded Econoday's consensus for a second month in a row. March's unemployment rate is expected to edge a tenth higher to 5.9 percent.

The Labour Force Survey is a key economic indicator giving an overall picture of employment and unemployment. Employment counts the number of paid employees working part-time or full-time in the nation's business and government establishments. The unemployment rate measures the number of unemployed as a percentage of the labor force.

As in the U.S., this report is used as an indicator of the health of the domestic economy. Employment trends and break-downs by industry groups highlight the strength in job creation and the implications for future sectoral activity. The unemployment rate is used as an indicator of tightness in labor markets and can foreshadow a future increase in wages. Labor force data provide investors with the earliest signs of industry performance. While other data are produced with a month or two delay, these data are available only a week to 10 days after the end of the latest month. Reactions can be dramatic - especially when the result is unanticipated.

The information in the report is invaluable for investors. By looking at employment trends in the various sectors, investors can take more strategic control of their portfolio. If employment in certain industries is growing, there could be investment opportunities in the firms within that industry.

The bond market will rally (fall) when the employment situation shows weakness (strength). The equity market often rallies with the bond market on weak data because low interest rates are good for stocks. But sometimes the two markets move in opposite directions. After all, a healthy labor market should be favorable for the stock market because it supports economic growth and corporate profits. At the same time, bond traders are more concerned about the potential for inflationary pressures.

The unemployment rate rises during cyclical downturns and falls during periods of rapid economic growth. A rising unemployment rate is associated with a weak or contracting economy and declining interest rates. Conversely, a decreasing unemployment rate is associated with an expanding economy and potentially rising interest rates. The fear is that wages will accelerate if the unemployment rate becomes too low and workers are hard to find.