41,000 jobs created in February but unemployment rate rises: Statistics Canada

Employment rose by 41,000 in February. The employment rate fell by 0.1 percentage points to 61.5%, as population growth (+0.3%) continued to outpace employment growth (+0.2%), reported Statistics Canada on Friday.

Ketut Subiyanto

The unemployment rate increased 0.1 percentage points to 5.8%, offsetting a decline in January.

Employment increased among core-aged (25 to 54 years old) women (+45,000; +0.7%) and men (+23,000; +0.3%). At the same time, there were fewer women aged 55 and older employed (-29,000; -1.4%), added the federal agency.

“Employment increased in Alberta (+17,000; +0.7%) and Nova Scotia (+6,300; +1.2%), while it declined in Manitoba (-5,300; -0.7%). There was little change in the other provinces,” it said.

“Employment gains were spread across several industries in the services-producing sector, led by accommodation and food services (+26,000; +2.4%) and professional, scientific, and technical services (+18,000; +0.9%). There were declines in other industries, led by educational services (-17,000; -1.1%) and manufacturing (-14,000; -0.8%).

“Total hours worked in February were little changed in the month (+0.3%) but were up 1.3% compared with 12 months earlier. Average hourly wages among employees rose 5.0% on a year-over-year basis in February (+$1.66 to $34.82), following an increase of 5.3% in January (not seasonally adjusted).”

In February, employment growth was driven by an increase in full-time work (+71,000; +0.4%). On a year-over-year basis, full-time work was up by 260,000 (+1.6%) in February, while part-time work was up by 108,000 (+3.0%), said StatsCan.

“The employment rate—the proportion of the population aged 15 and older who are employed—fell by 0.1 percentage points to 61.5% in February. This was the fifth consecutive monthly decline, the longest period of consecutive decreases since the six-month period ending in April 2009. The employment rate in February 2024 was down 0.9 percentage points from the recent peak of 62.4% observed in February 2023. This downward trend is associated with rapid population growth, which has outpaced employment growth in the past year,” said the report.

“Employment increased by 38,000 (+1.5%) among self-employed workers in February 2024, the first monthly increase since August 2023. There was little change in the number of public and private sector employees in the month. From February 2023 to February 2024, employment grew at a faster pace for public sector employees (+197,000; +4.7%) than for private sector employees (+160,000; +1.2%), while self-employment was little changed over the period (+11,000; +0.4%).

“The unemployment rate increased 0.1 percentage points to 5.8% in February, offsetting the decline recorded in January. The unemployment rate has held relatively steady in recent months, sitting at 5.8% for three of the past four months. This follows an upward trend from April 2023 to November 2023, when the rate increased from 5.1% to 5.8%. The labour force participation rate—the proportion of the population aged 15 and older who were employed or looking for work—held steady at 65.3% in February.”

James Orlando, Director of Economics at TD Bank, said there was nothing new from the Canadian labour market.

“Another decent gain in jobs, with weakness in the details. The boost to full-time jobs was nice to see, but this was all in public sector jobs and the notoriously volatile self-employment category. And as has been the case for 13 straight months, population growth (+83k) massively outstripped any gain in employment. As a result, the total number of unemployed people continues to rise (+220k since late 2022), causing the unemployment rate to rise again. Additionally, wage growth eased again, a trend that should continue now that the broad labour market has found greater balance,” he said

“The Bank of Canada has made it clear that it is not ready to cut rates yet. Today’s labour market report won’t sway this stance. While the job market has held in okay in spite of Canada’s meager pace of growth over the last year, the path of inflation is the deciding factor. And to date, the central bank believes it hasn’t seen enough evidence to move off the sidelines, although the slight easing in wage pressures may help. Looking at market pricing in the wake of today’s report, it is clear that markets aren’t swayed either, with odds of a June rate cut holding firm.”

Douglas Porter, Chief Economist for BMO Capital Markets, said today’s report is certainly impressive at first blush, particularly the towering rise in full-time jobs.

“However, it’s staggeringly clear that the results are flattered by ongoing massive population gains, and the labour market is thus actually gradually cooling. The steady back-up in the jobless rate, and a pullback in the vacancy rate (reported elsewhere) suggest that wage growth will eventually cool. On balance, this will not change the Bank of Canada’s worldview,” he said.

Nathan Janzen, Senior Economist at RBC, said the February employment data is consistent with the overall economy growing early in 2024, but still not fast enough to keep up with population growth.

“And a surge in business bankruptcies and rising household debt service ratios are reinforcing that near-term growth headwinds remain. The unemployment rate is still expected to edge higher in the first half of this year alongside slowing per-capita GDP. We continue to expect the combination of a softening economic backdrop and slowing inflation pressures will allow the BoC to pivot to gradual interest rate cuts starting in June,” he said.

Mario Toneguzzi