Investors will be looking to the March payrolls report coming out of the United States and Canada later today.
Both economies have seen a slower pace of growth in the first few months this year. But the labor market remains one of the key bright spots in the respective economies.
For the US, investors will be looking to see if the labor market recovers from the dismal performance in February. For Canada, there could be an upside surprise in the employment change.
US Payrolls to Rise in March
The monthly payrolls report from the United States will be coming out today. Data from the Bureau of Labor Statistics will show how the US labor market fared in March.
Economists forecast that the economy added 175k jobs during March. This marks a rebound in the employment change. In February, the economy added just 20,000 jobs. This was the slowest pace of job gains in five months.
The weakness in the labor market in February came due to a slowdown in the construction sector. However, the February payrolls report was overshadowed by outsized gains from January. January’s data revision saw the economy adding 304k jobs.
The unemployment rate held steady in February at 3.8%. Forecasts show that there will be no change to the unemployment rate in March as well. The US unemployment rate sits at a record low.
Amid signs of a slowdown in the economy, the labor market in the US has been one of the key indicators. Growth is expected to slow but the possibility of a sharp slowdown remains unlikely at the moment.
The Federal Reserve pledged to leave interest rates unchanged for the remainder of the year. It also stopped the balance sheet unwinding as a precautionary measure. While the first quarter growth is widely expected to slow, a better than expected labor market report could potentially diminish the concerns.
On average, the US economy has been adding about 200k+ jobs. Thus, the February jobs report was seen to be rather weak.
Besides the unemployment rate, the average wages will also be crucial.
The average hourly earnings are forecast to rise by 0.3% on the month in March. This comes after February saw the average hourly earnings rising 0.4%. On a year over year basis, average earnings rose 3.4% in February.
No Change Expected from Canada’s Unemployment
Canada’s labor market has been one of the sweet spots for the economy. The continued tightening in the labor market gives hope that the economy could weather a rough patch.
Data from February saw Canada’s unemployment rate holding steady at 5.8%, matching forecasts. The unemployment rate is averaging around 5.6% – 5.8% for the past few months. Gains in the job market rose for a second consecutive month.
In February, employment increased by 55,900. The official data from Statistics Canada showed that the gains came from full-time employment. The gains from January and February were the best since 1981.
Canada employment change, February 2019
For March, the median estimates show that Canada’s unemployment rate will hold steady at 5.8%. But forecasts for the employment change show that the economy might have shed 10,000 jobs during the month.
However, there could be a surprise in the report that will come out later today. Recent supporting data shows that Canadian firms continue to seek fresh talent. This comes despite a slower pace of growth.
Canada’s job vacancies report released a few days ago indicates that vacancies stood at the highest level since early 2015.
Although growth in Canada is slowing, the number of jobs added to the economy was rising. The contrast in reports suggests that the slowdown in the economy is due to the energy sector.
Recently, we saw early signs of somewhat improving data. Last week, Canada’s GDP growth for January saw the economy rising by 0.3%. This beat forecasts of a 0.1% increase. The data also reversed the 0.1% decline in December.
Still, the BoC will want to wait for more evidence while it maintains interest rates steady.