(Bloomberg) -- It was payback time for Canada’s labor market in January, with the biggest monthly job loss since the last recession -- all part-time -- as employers faced quickening wage gains.
Canada shed a net 88,000 jobs during the month, a sharp stop to a recent stellar performance that saw 2017 produce the biggest increase in jobs since 2002. The drop reflected a record loss of 137,000 part-time jobs, and a 49,000 gain in full-time work.
The employment drop coincided with an increase in the minimum wage in Canada’s largest province -- Ontario. That fueled an acceleration of the national wage rate to an annualized pace of 3.3 percent that was the fastest since 2015.
The report is a long-waited correction in a tightening labor market that is more consistent with an economy that has been slowing down since the second half of last year. While the unemployment rate increased to 5.9 percent in January, it’s still near its record low of 5.8 percent and the faster wage gains may give policy makers at the Bank of Canada more fodder to worry about inflation.
“A mysterious mix of good and bad, with the latter’s impact blunted by how strong job gains were in the lead up to these figures,” Avery Shenfeld, chief economist at Canadian Imperial Bank of Commerce, said in a note to investors.
The Canadian dollar rose after the report, gaining at C$1.2595 per U.S. dollar.
Economists surveyed by Bloomberg News had forecast the economy would generate 10,000 jobs in January, and the jobless rate would remain unchanged.
Canada’s economy has still seen employment increase by 288,700 jobs over the past 12 months -- 146,000 of which came in November and December. Full-time employment is up 558,900 over the past 18 months, near record levels hit in 2000.
“This is still a solid job market, we will have to monitor how the market adjusts to the minimum wage,” Brittany Baumann, a macro strategist at TD Securities, said by phone from Toronto. She cited the full-time job gain, faster wages and a low unemployment rate as signs of a resilient labor market.
Highlights of Canada January Jobs Report
- Ontario recorded the biggest decline last month, down 51,000 - - all part-time. It was the largest monthly drop for the province since 2009.
- Annual wages gains accelerated to 3.3 percent in January, the fastest since 2015 and up from 2.7 percent in December. Wage increases for permanent workers increased by 3.3 percent, up from 2.9 percent.
- Actual hours worked slowed in January to an annualized pace of 2.8 percent, from 3.3 percent in December
- Most of the job losses were in services, which posted a 71,900 decline. Goods-producing employers shed 16,200 jobs during the month
(A previous version of this story was corrected to show 18-month gain in full-time jobs is biggest since 2000)
(Updates with analyst comment in ninth paragraph.)
