Canada Employment Preview: Forecasts from five major banks, building on the remarkable surge seen in the prior month

Canada will release March employment figures on Friday, April 9 at 12:30 GMT and as we get closer to the release time, here are forecasts from economists and researchers at five major banks regarding the upcoming employment data. 

Another 80K new workers are expected in March, following February’s surprising gain of 336K. The unemployment rate should fall to 5.4% from 5.5% and the participation rate is forecast to be unchanged at 65.4% just 0.2 points below its final pre-pandemic level.

RBC Economics

“We expect a 50K increase in employment. Job vacancy rates are still very high, particularly in the hospitality sector, where employment remains well below pre-pandemic levels. Despite the availability of jobs, at 5.5%, the unemployment rate is not just below pre-pandemic levels, it’s the second-lowest monthly rate on record dating back to the early 1970s. That will both limit the pace of future employment growth and add to higher wage pressures as businesses compete for a smaller pool of available workers. We look for the unemployment rate to hold at 5.5% in March.”

NBF

“Although we believe that the labour market situation continued to improve during the month, supported by the amelioration of the epidemiological situation, we still expect a flat employment print. Far from being the start of a downtrend, this decline would in fact represent only a normalization after February’s breathtaking figure (+336.6K). Assuming the participation rate stayed unchanged at 65.4%, this result would leave the unemployment rate at 5.5%.”

CIBC

“Our forecast for a 100K gain would be predominantly concentrated in services such as accommodation & food, which even after February’s gain was still 200K jobs short of its pre-pandemic level. Of course, with the jobless rate already at a near-historic low of 5.5% in the prior month, and expected to dip further in March, worker availability will remain an issue for many firms in that sector. The low unemployment rate should also correspond with wage inflation accelerating further, even with monthly job gains concentrated in low-paying services sectors.”

TDS

“We look for a significant moderation in job growth following last month's blockbuster (336K) print with employment rising by just 35K in March, pulling the unemployment rate to 5.4%. Wage growth for permanent workers should push higher to 3.8% YoY in March from 3.3%, with base-effects contributing to the pickup.”

Citibank

“Net Change in Employment (Mar) – Citi: 115K, prior: 336.6K, Unemployment Rate – Citi: 5.3%, prior: 5.5%, Hourly Wage Rate Permanent Employees – Citi: 3.8%, prior: 3.3%. A further normalization of services sector activities throughout late-February and early-March should lead to another month of strong job gains. However, with the unemployment rate now below pre-COVID levels and likely to fall further to 5.3% in March, a shrinking pool of available workers could limit monthly job growth. With demand for workers likely still strong, however, especially over the summer as services activity bounces back, labor shortages could see further upward pressure on wages. A further pick-up in wages ahead of the April BoC meeting and over coming months could support an even faster removal of accommodation by the BoC.”