Canada adds ‘puzzling’ 30,000 jobs in February

Ottawa: Canada added 30,000 jobs in February despite concerns over the spreading coronavirus, while its unemployment rate rose 0.1 percentage points to 5.6 percent, according to government data.

Statistics Canada said there were more people working in wholesale and retail trade, in manufacturing (for a second consecutive month), as well as in information, culture and recreation. At the same time, employment declined in professional, scientific and technical services and in accommodation and food services. Economists noted a "puzzling gap" between hiring and a slowing export-driven economy, adding that this latest data would not likely factor into market decisions as it predates what are likely to be the biggest impacts of the COVID-19 outbreak.

"Canada ended the last of the pre-virus jobs reports with a flourish, as a strong month for employment and a healthy wage gain showed that everything was fine in the labor market," said CIBC analyst Avery Shenfeld. "We won´t really see the major impacts of the coronavirus for a couple of months, so markets will look past all of these numbers," he added.

Oxford Economics echoed this view, calling the February jobs gains "welcome news, but old news." "We expect weaker employment growth moving forward, as the COVID-19 outbreak weighs on confidence and spending plans," it added. On Wednesday the Bank of Canada cut its key lending rate for the first time since 2015, to 1.25 percent, in response to the growing economic risk posed by the epidemic.

According to Statistics Canada, the February job gains were mostly in Quebec, Alberta, Nova Scotia and Manitoba provinces.

More youth found jobs (+22,000), but the youth unemployment rate held steady at 10.3 percent. There was no net change in job figures for other demographics or regions.

Meanwhile, Canada´s surplus with its biggest trading partner the United States narrowed in January while the coronavirus epidemic hindered trade with China, according to government data released Friday.

Overall, Canada´s trade deficit with the world widened from a revised Can$732 million (US$545 million) in December 2019 to Can$1.5 billion (US$1.1 billion) in January, said Statistics Canada.

The agency had previously reported a much smaller trade deficit in December, but in a revised statement it noted higher imports and lower exports in the month.

Meanwhile, Canada´s trade surplus with the United States narrowed from Can$4.7 billion in December 2019 to Can$3.6 billion in January. This was its smallest surplus since February 2019. A slowing of the Chinese economy as Beijing stepped up efforts to contain the spread of the new coronavirus also resulted in a steep drop in Canadian trade with its number two partner.

This compounded a downward trend in the second half of 2019 due to strained ties over Canada´s arrest on a US warrant of Huawei executive Meng Wanzhou and China´s detention in apparent retaliation of two Canadians. Imports from China in 2019 totaled Can$46.8 billion, and exports to China settled at Can$24.4 billion.

In January, exports to China decreased 7.8 percent with lower sales of gold, potash and wood pulp contributing most to the drop. Imports from China fell 12.1 percent to the lowest level in three years, with purchases of cell phones posting the largest decline. Statistics Canada said total Canadian exports fell 2.0 percent in January to Can$48.1 billion in part due to lower shipments of motor vehicles.

Total imports were down 0.5 percent to Can$49.6 billion, mostly on lower purchases of pharmaceuticals. The agency cited temporary shutdowns at assembly plants and the recent closure of a General Motors factory in Oshawa, Ontario, for the drop in exports of motor vehicles and parts.

For the same reasons, imports of motor vehicle engines and parts were also down substantially in January. After surpassing Can$50 billion per month through most of 2018 and 2019, imports have been below the threshold for the past three months.

Fewer imports of antiviral and cancer drugs pushed down overall imports of pharmaceutical products (-26.1 percent) after four consecutive months of growth, over which they rose by the same amount.