| Consensus | Consensus Range | Actual | Previous | |
| Employment - M/M | 10,000 | -15,000 to 50,000 | -83,900 | -24,800 |
| Unemployment Rate | 6.6% | 6.6% to 6.7% | 6.7% | 6.5% |
Highlights
The Canadian economy shed 83,900 jobs in February, a shockingly weak performance given the consensus expectation of a 10,000 increase in an Econoday survey of forecasters, with the lowest estimate at minus 15,000. The unemployment rate rose to 6.7 percent from 6.5 percent, more than the 6.6 percent expected, with the participation rate edging down to 64.9 percent from 65.0 percent.
Adding to the weakness of the picture, all job losses were full-time positions, down 108,400, while part-time employment increased 24,500. Employment declined across services, down 56,200, and goods-producing industries, down 27,900.
The private sector led the deterioration with 72,600 job losses over the month, although the public sector also shed 17,100 jobs. Self-employment was up 5,600 while the number of employees plunged 89,600.
Employees keeping their jobs saw an increase in the average hourly wage growth pace to 3.9 percent in february from 3.3 percent year-over-year in January.
The central bank faces a conundrum as wage growth picks up amid above-target inflation, while job losses are far worse than even the most pessimistic estimate, led by full-time private sector positions. On Monday, the Bank of Canada will also have the latest state of inflation before its meeting two days later.
Within goods-producing sectors, employment fell in all major categories except for a 1,800 gain in utilities. The largest declines were in construction, down 11,800, and manufacturing, down 9,200.
In services, nine of 11 sectors cut positions over the month, led by a 17,900 drop in wholesale and retail trade. Information, culture and recreation was down 12,000. Employment decreased 8,700 in both finance, insurance, real estate, rental and leasing, and accommodation and food services."Other services" excluding public administration were down 13,900. The only two sectors that created jobs in February were transportation and warehousing (10,300) and public administration (8,100).
Market Consensus Before Announcement
Jobs expected up by 10K after declining 25K a month earlier as employment reflects a weak, uncertain economy. The jobless rate is expected up to 6.6 percent from 6.5 percent a month ago.
Definition
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.
Description
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.