* Canada economy creates 42,900 new jobs in March
* Unemployment rate dips to 6.9 percent from 7.0 percent
(Adds PMI data, U.S. employment figures, quotes)
By Louise Egan
OTTAWA, April 4 Canada's economy churned out
twice as many new jobs as expected in March and the unemployment
rate dropped a notch, but most of the gains were in the public
sector and part-time positions, a sign businesses were still
cautious about hiring.
The report adds to recent data showing the economy is
strengthening after a weak patch in December and at the start of
2014, but it is unlikely to knock the Bank of Canada off its
neutral stance on interest rates, analysts said.
Statistics Canada reported on Friday the job market added
42,900 net new positions in the month, compared with market
expectations of 20,000. The jobless rate dipped to 6.9 percent
from 7.0 percent.
In a separate report, the Ivey Purchasing Managers Index
showed the pace of purchasing activity slowed in March and the
employment measure contracted.
The news of strong North American hiring - U.S. nonfarm
payrolls jumped by 192,000 new jobs last month - helped push the
Canadian dollar to its highest in nearly a month.
But the jobs numbers are volatile from month to month, and
analysts warned that it was premature to proclaim all was rosy
after a slow spell.
"One month does not a trend make because this came after a
long stretch of non-existent hiring," said Avery Shenfeld, chief
economist at CIBC World Markets.
"We still have some catch-up to do then for employment to
match up with economic growth over the prior year," he said.
The six-month moving average for employment growth stood at
9,700 in March, up from 3,400 in February but at a level still
considered sluggish. Overall, the pace of job creation in Canada
has been slowing, averaging 8,300 per month in 2013, less than
one-third of the 2012 average.
The Canadian dollar firmed to C$1.10974 to the U.S.
dollar, or 90.11 U.S. cents, compared with Thursday's close of
C$1.1039 to the greenback, or 90.59 U.S. cents.
The headline jobs growth for Canada looked better than the
details, in contrast to February's report which showed 7,000 job
losses but solid full-time employment.
PUBLIC SECTOR JOBS
In March, 30,100 Canadians obtained part-time jobs while
only 12,800 won full-time positions. The public sector added
some 39,300 workers to its payrolls compared with 3,900 in the
The biggest gains were in health care and social assistance,
and in business, building and other support services.
Agriculture lost 12,400 jobs.
In the year to March, the economy generated 190,000 jobs, of
which 137,000 were full-time.
"Overall this is good news for the economy," said Doug
Porter, chief economist at BMO Capital Markets, adding that the
latest gains lift year-over-year employment growth to around 1
"I think (the Bank of Canada) will be encouraged by this
number. I don't believe it moves the needle significantly. As
I've said before, I do think this quashes talk of rate cuts, at
least for now," said Porter.
The Bank of Canada has held its main interest rate at 1.0
percent for more than three years and since last October has
adopted a slightly more dovish tone but declared itself
"neutral" on rates.
On April 16, central bank chief Stephen Poloz gets his next
chance to update the bank's outlook on the economy and signal
any bias towards a rate cut or rate hike.
Finance Minister Joe Oliver said he was pleased with the
report but was not resting on his laurels.
"While these gains are positive, we must continue to focus
on jobs and the economy with the global economy remaining
fragile," he said in an emailed statement.
More than 30,000 jobs went to youth aged 15-24, with
employment gains little changed for those 25 years and over.
Youth unemployment was unchanged though, at 13.6 percent.
Hourly wages for permanent employees, closely watched by the
Bank of Canada for signs of inflation, rose 2.4 percent in the
year to March compared 2.7 percent in February.
(Additional reporting by Alex Paterson, Andrea Hopkins and Leah
Schnurr; Editing by Bernadette Baum and Meredith Mazzilli)