Statistics Canada’s latest data today lays the foundation for the Bank of Canada’s expected 25 basis points reduction next week amid ongoing trade tensions and increased uncertainty.
Jobs in Canada remained almost the same in February, with only 1,100 jobs added, a far cry from the significant increase in the previous two months. Meanwhile, the unemployment rate remained stable by 6.6%.
According to Scotiabank’s Derek Holt, some economists point out that the massive employment rates in December (+91k) and January (+76k) are a surprise result.
Economists at Royal Bank of Canada predicted a net new job of 15,000.
Since September 2024, the workforce participation rate has tracked the percentage of Canadians 15 years and older who are working or looking for a job, which is 0.2% in February.
In response to the data, the Canadian dollar dropped 0.4% to 0.697 to 0.697 before returning to a certain basis, while the Canadian government’s five-year bond yield dropped to 2.70% at the time of writing.
The total hours of work also dropped significantly, down 1.3%, the biggest drop since April 2022. Most of Statistics Canada’s decline was attributed to severe winter weather, which caused 429,000 workers to lose hours between February 9 and 15.
“The job market has not been able to maintain the rate of fever in the past few months,” wrote James Orlando of TD Economics, adding: “Given the increased policy/trade uncertainty, worsening hiring sentiment may have also begun to bleed.”
Douglas Porter of BMO expressed concerns about the impact of the ongoing trade dispute, which he believes has begun to affect Canada’s job market. “Through the monthly swing, it’s clear that the job market has been turning in recent months… until the trade war breaks out,” he said.
There are gains in industry performance, wholesale and retail trade (+51,000) and finance, real estate, rental and leasing (+16,000), while there are significant losses in professional, scientific and technical services (-16,000) as well as transportation and warehouse losses (-23,000).
Tax rate cuts are expected next week as trade wars focus
Canadian economists point out that the anxiety of the trade war remains at the spotlight compared to labor data, as has been since last month.
Porter is a “little drama” in the work data in Canada today, noting that the market will soon refocus on the ongoing trade war.
TD’s Orlando highlighted the importance of watching the Canadian labour market “weakness” in the coming months, but noted that the job market “has been caught in a solid foothold of the current tariff crisis, considering the major headwinds facing the economy.”
Orlando hopes Bank of Canada will lower prices by 25 basis points next week as the market is currently pricing.
In the U.S., this morning’s situation increased by 151,000 jobs last month, although the unemployment rate rose slightly to 4.1%.
TD Economics’ Thomas Feltmate noted that the recruitment activity was positive in the last quarter, but was expected to be lightened due to layoffs due to the Department of Government Efficiency (Doge) and ongoing trade policy uncertainty.
That is, Feltmate’s research points out that the Fed cut three 25bps in 2025.
“Financial markets are increasingly concerned about the slowdown in growth outlook in recent weeks, and Fed futures are now lowering the tax rate by three 25bps by the end of the year,” he said. “However, the Fed is unlikely to be shocked by recent market volatility, especially in a healthy labor market and potential policy changes that could further increase inflationary pressures.”
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Last modified: March 7, 2025
