* Stunning March jobs growth raises rate hike expectations
* Signals revival in stalled job market
* Government job cuts keep outlook cautious
* Feb building permits jump, housing plans cool
* Purchasing activity stays positive in March
By Louise Egan
OTTAWA, April 5 Canada's ailing jobs market
sprang back to life in March with a stunning 82,300 net new
jobs, the most since September 2008 and a tentative sign that
the economy may be growing enough muscle to pressure the central
bank to raise interest rates.
The job gains reported by Statistics Canada on Thursday were
eight times bigger than expected, and were spread fairly evenly
across several sectors. Strong private-sector hiring and more
full-time positions suggested underlying economic strength.
"Hibernation is over for Canadian employment. After a
lengthy lull it's come roaring back with a rather incredible
gain," said Doug Porter, deputy chief economist at BMO Capital
The jobless rate in the month dipped to a six-month low of
7.2 percent from 7.4 percent in February, more than 1 percent
below the comparable U.S. rate.
The news pushed the Canadian dollar higher against
the U.S. dollar.
Other economic data on Thursday showed that fewer
residential building permits were issued in February, which may
signal that Canada's hot housing market, a source of concern for
policymakers, is cooling. The overall value of building permits
in the month, however, jumped 7.5 percent from January on
strength in nonresidential sectors.
Another indicator showed the pace of corporate purchasing
activity in the economy in March remained positive, with the
Ivey index dipping to 63.5 from 66.5 in February. Any figure
above 50 in the index shows growth.[ID: nT5E8EJ00S]
JOB CUTS ON HORIZON
Even though Canada had recovered all the jobs it lost during
the recession by early last year, employment growth had stalled
over the past six months and began underperforming that in the
United States for the first time since the 2008-09 recession.
The March data suggests that may no longer be the case.
"I think the biggest fear about Canada is that we had
front-loaded the recovery or the expansion, and that things were
beginning to dwindle. Now it really does throw an important hole
in that argument," said Camilla Sutton, chief currency
strategist at Scotia Capital.
It's too early to declare March a turning point, though, as
monthly data can be volatile and no trend will be apparent for a
few months. Unusually mild weather in March may have led to more
hiring in some industries, analysts said.
Furthermore, big jobs cuts in the federal public service
will be reflected in upcoming months as the Conservative
government's new wave of fiscal restraint hits 19,200 jobs over
three years. The government said the proposed reductions
represent 0.1 percent of all jobs in Canada and that job growth
elsewhere will more than compensate.
Several hundred job cuts have already been announced for the
current year, although its not clear exactly when they will take
HAWKISH CENTRAL BANK TALK
So far, analysts are sticking to their predictions that the
central bank will hold its key interest rate steady at 1.0
percent until next year. Bank of Canada Governor Mark Carney
sounded a bit more hawkish in remarks on Monday, painting a less
scary picture of the global economic backdrop and noting that
domestic growth has been somewhat stronger than anticipated.
"This follows hard on the heels of some tougher talk from
the Bank (of Canada) so I think it is just going to increase the
chatter that the bank may be going earlier than the market had
expected," Porter said.
Traders raised their bets on the possibility of central bank
rate hike later this year following the jobs report.
Most of the hiring in March took place in service industries
which added 57,500 to payrolls, led by health care and social
assistance and information, culture and recreation.
The goods-producing sector added 24,900 jobs, helped by
manufacturing and construction.