Friday’s employment information from Statistics Canada confirmed a lack of 33,000 jobs in March—the primary decline since January 2022—amid rising tariff uncertainty and tensions with the US. The unemployment price ticked as much as 6.7%, the primary enhance since November.
The report was launched the identical day markets tumbled on rising tariff fears, with the TSX shedding almost 1,000 factors and U.S. indexes posting their second straight day of losses.
The job losses got here as a shock to many economists. BMO’s Douglas Porter mentioned the consensus was for job progress to be “about flat,” whereas Desjardins Senior Economist Laura Gu had anticipated a modest rebound of 10,000 jobs. Neither forecast materialized.
March’s job losses have been pushed largely by a decline in full-time positions (-62,000), with wholesale and retail commerce (-29,000) and knowledge, tradition and recreation (-20,000) among the many hardest-hit sectors. The tip of the federal GST/HST vacation could have dampened retail hiring. Losses have been concentrated in Ontario, Alberta and Quebec, whereas small positive aspects in different sectors doubtless mirrored a rebound from February’s weather-related disruptions.
Following the discharge, the Canadian greenback slipped from 0.7064 to 0.7024, whereas the 5-year bond yield fell from 2.51% to 2.36% at market open earlier than recovering barely to 2.46%.
“The impression of commerce tariffs seems to be working its approach via the financial system,” wrote TD Economics’ James Orlando, including, “Companies and customers are naturally hesitant within the face of heightened political uncertainty. [Friday]’s report displays this, with full-time jobs within the cyclically delicate personal sector driving the losses.”
There have been just a few vibrant spots: complete hours labored rose 0.4% in March after a pointy drop in February, and have been up 1.2% year-over-year. Common hourly wages elevated 3.6%.
BoC in wait-and-see mode with price reduce odds now a coin toss
As Canadian Mortgage Developments has reported beforehand, commerce warfare issues and tariff uncertainty have typically outweighed financial information—and that development seems to be persevering with.
Scotiabank’s Derek Holt notes that the newest weak job numbers will not be on the BoC’s radar in comparison with the “shock” of commerce wars.
“What’s going to carry the day is that the commerce shock is way greater than anybody anticipated,” he wrote. As a aspect word, Holt additionally questioned the accuracy of the March job losses, stating that “StatCan utilized the bottom seasonal adjustment issue on document for months of March,” which he believes exaggerated the decline.
BMO’s Porter agrees that whereas the weak jobs report and market selloff are notable, they doubtless aren’t sufficient to immediate a price reduce on April 16. Nonetheless, he says the newest information will “maintain prospects of an April price reduce very a lot alive.”
Nonetheless, since Friday’s fairness sell-off, market odds of a quarter-point price reduce on April 16 have jumped to 49%, up from 34% the day earlier than, based on market-implied pricing.
Desjardins’ Laura Gu echoed Porter’s view {that a} price reduce is feasible, however mentioned the Financial institution is more likely to undertake a “wait-and-see strategy” given the continued commerce uncertainty—until market volatility worsens.
TD’s Orlando additionally sees the choice as “undecided,” however believes a reduce is important.
“…we expect the financial institution ought to maintain slicing by no less than one other 50 bps (cumulative) over the approaching months with a view to cushion the blow from tariffs,” he mentioned, including that the newest “discouraging jobs report showcases the draw back dangers to the financial system, which warrants additional motion from the BoC.”
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Final modified: April 7, 2025