Canada – The Survey of Employment, Payrolls and Hours (SEPH), which queries businesses, showed jobs were up 25K in March over February. Employment in the goodsproducing industries was essentially level. Gains in construction (+4K) were offset by losses in resources (-2K) and manufacturing (-2K). In the service-producing industries, employment rose by 23K. Over the year ended in March, an average of 12K jobs were created per month. For the same period, the Labour Force Survey, which queries households, reported a slightly lower average monthly increase of 10K for paid employment. According to the SEPH, year-on-year earnings growth picked up from 0.6% in February to 0.7% in March, with 7 of the 10 largest industrial sectors making progress.
Annual wage growth topped the national average in various sectors, including administrative and support services, manufacturing, public administration, retail trade, and professional services. However, it was below average in others, including wholesale trade, educational services, construction, accommodation and food services, and health care. On a yearto- date basis, employment continued to struggle in the goodsproducing sector, as manufacturing and resources registered losses of 16K and 9K, respectively. Fortunately, the serviceproducing sector continued to generate significant gains, posting net job creation above 20K for a second month in a row. On a regional basis, job creation was tilted to Ontario (+12K), Quebec (+4K) and British Columbia (+5K). These are the only provinces to have generated employment in the first three months of 2016. Alberta (-28K) leads the other provinces in net job losses.
As widely expected, the Bank of Canada left its overnight rate unchanged at 0.50% in May. The central bank estimated that oil production disruptions would shave about 1¼ percentage points from real GDP growth in the second quarter, but that the economy would bounce back in the third quarter as reconstruction began and oil production resumed. In its latest assessment, the monetary authority also focused on the financial position of households, underscoring increased vulnerabilities and persistent strong regional divergences in the housing market. This picture argued for caution on the part of the Bank as concern about financial stability continued to build. Fortunately, the central bank is not the only player in town. The federal government has been willing to use its fiscal tools to support the economy. To our eyes, the fiscal and monetary policy mix at this point in time is appropriate for the economy’s ongoing structural adjustment. With core inflation holding at close to 2% as a result of continued lift from past exchange-rate depreciation, we see the Bank leaving its policy stance untouched until late next year.
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