Unlikely to move the bar on Bank of Canada rate cut, say economists
Canada’s economy gained 41,000 jobs in February, but the unemployment rate ticked up to 5.8 per cent, Statistics Canada reported Friday.
The job gains more than doubled expectations of economists surveyed by Bloomberg. Employment growth, however, continued to lag population growth, with the employment rate falling by 0.1 percentage points to 61.5 per cent.
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The employment rate has now decreased for five months in a row, the longest losing run since 2009.
“This downward trend is associated with rapid population growth, which has outpaced employment growth in the past year,” Statistics Canada said.
The data show Canada’s economy grew in early 2024, but not fast enough to keep up with the rising population, Royal Bank of Canada’s assistant chief economist Nathan Janzen said in a note, adding that this is why the unemployment rate edged higher.
Average hourly wage growth eased to five per cent from 5.3 per cent in January, which could help cool core inflation later this year, Dominique Lapointe, director of macro strategy for Manulife Investment Management, said.
Job gains, which were driven by full-time employment, were spread across several industries in the services-producing sector.
“Today’s report is certainly impressive at first blush, particularly the towering rise in full-time jobs,” BMO chief economist Douglas Porter said in note. “However, it’s staggeringly clear that the results are flattered by ongoing massive population gains, and the labour market is thus actually gradually cooling.”
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Job gains were driven by a rise in self-employed positions, up 38,300, the first monthly increase since August 2023. Despite self-employment accounting for most of the full-time job gains, the category remains weak, said Statistics Canada.
The Bank of Canada, which held its benchmark interest rate at five per cent this week, will be watching the data to gauge inflation risks, but economists said these numbers aren’t likely to move the bar.
“The Canadian labour market continues to loosen, albeit at a snail’s pace that isn’t going to speed up the timeline for Bank of Canada interest rate cuts,” CIBC Capital Markets economist Andrew Grantham said in a note on the data.
The 0.1 percentage point rise in the unemployment rate merely reversed a surprise decline in the rate the month before. This rate has held relatively steady, sitting at 5.8 per cent for three of the past four months.
And though wage growth eased, it remains higher than the central bank would likely want to see, Grantham said.
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Much of the increase in unemployment has come from longer job searches for new labour market entrants, such as students, but the number of permanent layoffs is also up 32 per cent from a year ago in February, RBC’s Janzen said.
He said the unemployment rate is still expected to edge higher in the first half of this year as the economy slows further.
“We continue to expect the combination of a softening economic backdrop and slowing inflation pressures will allow the BoC to pivot to gradual interest rate cuts starting in June,” Janzen said.
• Email: dpaglinawan@postmedia.com
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HALIFAX – Ottawa is negotiating a $500-million bailout for Nova Scotia’s privately owned electric utility, saying the money will be used to prevent a big spike in electricity rates.
Federal Natural Resources Minister Jonathan Wilkinson made the announcement today in Halifax, saying Nova Scotia Power Inc. needs the money to cover higher costs resulting from the delayed delivery of electricity from the Muskrat Falls hydroelectric plant in Labrador.
Wilkinson says that without the money, the subsidiary of Emera Inc. would have had to increase rates by 19 per cent over “the short term.”
Nova Scotia Power CEO Peter Gregg says the deal, once approved by the province’s energy regulator, will keep rate increases limited “to be around the rate of inflation,” as costs are spread over a number of years.
The utility helped pay for construction of an underwater transmission link between Newfoundland and Nova Scotia, but the Muskrat Falls project has not been consistent in delivering electricity over the past five years.
Those delays forced Nova Scotia Power to spend more on generating its own electricity.
This report by The Canadian Press was first published Sept. 16, 2024.
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TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
Companies in this story: (TSX:ROOT)
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VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
The Canadian Press. All rights reserved.
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