Canada’s unemployment rate fell 0.2 percentage points to 5.3 per cent in March, the lowest rate on record since comparable data became available in 1976, Statistics Canada has said.
The drop in the overall unemployment rate in March was driven in large part by a decline of 2.1 percentage points in the unemployment rate for male youth, which fell to a low of 10.2 per cent. In contrast, the unemployment rate for female youth was little changed in March at 9.3 per cent, according to Statistics Canada.
With the exception of an increase in January 2022, the unemployment rate has fallen consistently in recent months, mirroring the situation in other countries with increasingly tight labour markets, including the US, Australia and the UK, Xinhua news agency reported.
Statistics Canada said the total employment rose by 73,000, or 0.4 per cent, in March, driven by an increase of 93,000, or 0.6 per cent in full-time work. A frequent point of comparison between Canada and the US is the employment rate, defined as the number of people who are employed as a percentage of the working-age population, which is typically higher in Canada.
Adjusted to US concepts, and for the population aged 16 and older, the employment rate was 62.4 per cent in Canada and 60.1 per cent in the US in March. The rate was unchanged from February 2020 in Canada, compared with a decline of 1.1 percentage points in the US, Statistics Canada explained.
Royal Bank of Canada economist Nathan Janzen said in a market report that with “extremely” tight labour markets and above-target inflation, there is no reason for the Bank of Canada to leave interest rates at emergency low levels.
“We look for the central bank to hike rates next week to build on a 25 basis point increase in March with a 50 basis point hike this time more likely,” Janzen said.
Andrew Grantham, economist with the Canadian Imperial Bank of Commerce, also forecast a non-standard 50 basis point hike from the central bank at next week’s meeting.
“Because we think that the jobless rate can move down slightly further without creating sustained inflationary pressure, labour market conditions don’t yet warrant a rapid rise in interest rates to above the neutral rate which is the path financial markets are currently anticipating. We still see rates peaking around that neutral level of 2.25 per cent in 2023,” Grantham said in his market report.
The central bank is slated to announce its decision for the benchmark rate target next Wednesday.