-Avery Shenfeld, chief economist at CIBC World Markets
The unemployment rate in Canada rose more than expected in February due to the number of people looking for work grew, Statistics Canada reported. The jobless rate climbed to 6.8% last month, up from 6.6% in January, as the economy lost 1,000 jobs during the measured month, after creating 35,400 new positions in January. Employment in Canada remained unchanged in February, as the gains in the full-time sector were compensated by losses in the part time one. On a yearly basis, however, employment climbed 0.7%, or by 130,000 new positions. Natural resources were the main reason for February's overall fall, with about 17,000 jobs being lost in the mining and oil and gas extraction sector, with employers providing support services taking the biggest hit.
The Bank of Canada has been concerned of the negative effects of lower crude prices on the nation's employment, economic growth as well as inflation. In response, the BoC surprised the markets in January by cutting its interest rate to 0.75%. During the interest rate announcement in March, the central bank decided to pause further rate cuts to see how the economic situation evolves. The BoC also added that crude oil prices were around the level assumed in January's Monetary Policy Report, which further justified the view that no rate cut was needed at this point.
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