U.S. employment disappoints as Canada reports job growth

Author: Portfolio Specialist Group

April 9, 2018

AGF Weekly Perspectives

“A recap of last week’s top economic news and what’s to come”

U.S. employment pulls back

  • U.S. employment missed expectations with only 103,000 positions added in March, a six-month low, after surging with 326,000 new jobs in the prior month. Professional and business services led the with 33,000 positions added, while the construction sector was amongst the largest declines, losing 15,000 positions.
  • The U.S. unemployment rate held at 4.1% for the sixth consecutive month and remains at 17-year lows.
  • Wage growth improved 0.3%, holding annualized average hourly earnings at 2.7% and in-line with expectations.

Eurozone economic data strengthens

  • Eurozone labour conditions strengthened further with the unemployment rate reaching 8.5% in February, down 0.1%, to the lowest level since 2008.
  • Also reported, eurozone inflation grew at a 1.4% annualized pace in February, up from 1.1% in the prior month. Core inflation remains well below the central bank’s target, however, with 1.1% annualized growth.
  • Retail sales in the region missed expectations with only a 0.1% gain in February and are 1.8% higher from a year ago. Outside of food and drink purchases, sales were relatively muted during the month.

Canada reports healthy job gains

  • The Canadian economy added 32,300 jobs in March, doubling the prior month’s pace though ended the first quarter negative after a significant decline in January. Positively, full-time employment led March’s gain with 68,300 positions added, more than offsetting a decline of 35,900 part-time positions.
  • Construction, public administration and educational services saw notable gains, while manufacturing jobs declined. Regionally, Quebec accounted for nearly half of the headline gain with Ontario and Alberta reporting strong employment growth.
  • A larger labour force in March left the unemployment rate unchanged at 5.8%. Average hourly earnings were also unchanged from the prior month with 3.1% annualized growth.

Other economic news

  • The Eurozone Manufacturing PMI was unchanged in March at 56.6 as Germany continues to drive activity with a Manufacturing PMI of 58.2, down 0.2 though still firmly in expansionary territory. In China, the Caixin Manufacturing PMI fell to 51.0 during the month from 51.6 previously, and the U.S. ISM Manufacturing PMI unexpectedly fell to 59.3 in March, though remains near 13-year highs.
  • German industrial production fell 1.6% in February, suffering the largest monthly decline since 2015 and well below expectations of a moderate gain. The losses were broad-based across several sectors, suggesting the eurozone’s largest economy may have slowed in the first quarter.

What’s to come

U.S. inflation and Canadian housing

  • U.S. price pressures are expected to pick up further with March’s inflation reported on Wednesday. In Canada, housing starts and building permits will be reported in an otherwise quiet week for economic data.

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