The US economy added 916,000 jobs in March and the unemployment rate edged down to 6 per cent in a sign that the recovery was accelerating in the month that Joe Biden signed his $1.9tn stimulus into law.
The non-farm payrolls data released on Friday exceeded economists’ expectations and marked a sharp improvement from the upwardly revised 468,000 jobs created in February and 233,000 positions created in January.
The improvement in the labour market has occurred amid optimism over America’s fight against the pandemic, as a winter surge in infections has ebbed and the rate of vaccinations picked up sharply.
In the past few weeks, Covid-19 cases have started to increase again but the pace of inoculation has continued to rise, raising hope of further improvement in coming months.
The March job gains were not only larger than in previous months, but more broadly based. Hiring in the leisure and hospitality sector, which has been especially sensitive to the ups and downs of the pandemic but drove last month’s job gains, slowed from a pace of 384,000 to 280,000.
But goods-producing employment, including manufacturing and construction, bounced back sharply, from job losses of 44,000 in February to a gain of 183,000 positions last month. Government hiring surged to 136,000 after shedding 90,000 jobs in February.
The report weighed on the prices of short-term government bonds, with some traders positioning for the prospect that a faster economic rebound could prompt the US central bank to tighten policy faster than previously thought. The yield on the two-year note, which has been anchored near zero, rose 0.03 percentage points to 0.19 per cent. It was one of the largest one-day increases in the yield on the note over the past year.
Future interest rates implied from Fed funds futures and eurodollars also climbed on Friday, underlining the shifts by investors.
“It seems to be the recovery [is] happening much more quickly than people thought could possibly move the Fed into a position where they may have to do something sooner rather than later,” Tom di Galoma, a managing director with Seaport Global Holdings, said. “The front-end is starting to price in a tightening.”
The economic recovery in recent months had predominantly hit long-term US Treasury debt, lifting yields on the 10-year note to more than 1.7 per cent. But Federal Reserve officials have not expressed any alarm over rising borrowing costs or even the likely surge in inflation this year, saying it is likely to be transient.
Long-dated US government bonds, which recently notched the worst quarterly performance since 1980, slid after the data was released.
The benchmark 10-year Treasury yield climbed 0.05 percentage points to 1.72 per cent in morning trading in New York, not far from the 14-month peak of 1.78 per cent reached earlier this week.
Five and seven-year Treasuries were also under pressure. The yield on the five-year note rose just under 0.08 percentage points to 0.98 per cent, while the 7-year traded 0.06 percentage points higher to 1.42 per cent.
Major stock markets globally, including US exchanges, are closed for the Easter weekend. Speaking before heading to Camp David for the holiday on Friday, Biden said the US still had “a long way to go to get our economy back on track” but the improvement was evident.
“My message to the America people is this: Help is here. Opportunity is coming”.
The strength of the jobs report was amplified by the decline of the unemployment rate from 6.2 per cent to 6 per cent, as more Americans found jobs and more looked for jobs, with the US labour force expanding by 347,000 people.
“The [rebound] still leaves employment 8.4m below its pre-pandemic peak from just over a year ago but, with the vaccination programme likely to reach critical mass within the next couple of months and the next round of fiscal stimulus providing a big boost, there is finally real light at the end of the tunnel,” said Paul Ashworth, chief US economist at Capital Economics.
Brian Levitt, global market strategist at Invesco, said the report was “confirmation of what we all were starting to pick up on some months ago, which was that the economy is accelerating and the vaccine rollout is a game changer”.
“You add on top of that the fiscal support [with] a lot of money set to be deployed . . . and as a result you are seeing businesses hire to address current demand and get in front of future demand.”
The recovery seen in the labour market has not erased the scarring caused by the pandemic, and investors expect the US central bank and the White House to continue to stimulate the economy given millions of Americans remain out of work.
“Today’s report confirms that labour market conditions are decidedly improving but reaching broad-based and inclusive full employment will be a multiyear process. As such, we expect the Fed to keep rates steady until mid 2023,” said Nancy Vanden Houten, lead US economist at Oxford Economics.
“People will focus on the fall in the unemployment rate but that number is not that relevant in terms of what the Fed is looking for,” added Gershon Distenfeld, the co-head of fixed income at AllianceBernstein. “What really matters is what does the economy look like when we open up? How much of the supply side has been damaged?”
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
