- Doug Porter, BMO Capital Markets
Canadian job growth accelerated markedly last month, surprising markets and suggesting that the economy started the 2017 year strong. Statistics Canada reported on Friday the economy added 48,300 jobs in January, following the preceding month's 53,7000 and surpassing analysts' expectations for a fall of 10,100 jobs. The largest job gains were seen in the services sector. Data showed full-time positions and part-time positions grew 15,800 and 32,400 in January, respectively. Last month's gains cooled the unemployment rate to 6.8% from 6.9% in November. Statistics Canada said the economy experienced strong job growth during the second half of 2016, but it was driven mostly by part-time work. However, analysts suggest that full-time employment will rebound this year. After the release, the Loonie rose markedly against other major currencies. The Canadian economy was hurt badly by the commodity price shock that forced the Bank of Canada to lower interest rates twice in 2015. Nevertheless, economists state that the worst of the market shock from the slump in oil is over and prices will rebound in 2017. Friday's data is not expected to impact significantly the Central bank's monetary policy; however, it is likely to lower the next rate cut probability. The BoC is set to keep rates at a record low of 0.50% in 2017.
© Dukascopy Bank SA