OTTAWA — The Canadian economy added 34,500 jobs in January, fuelled by gains in the manufacturing, construction and agriculture industries, Statistics Canada said Friday.
The increase in jobs came as the unemployment rate fell to 5.5 per cent compared with 5.6 per cent in December, according to the monthly labour force survey.
Economists on average had expected an increase of 15,000 jobs for January, according to financial markets data firm Refinitiv.
Bank of Montreal chief economist Doug Porter said underlying job growth appears to be on track, after a brief scare late last year, and conditions remain tight.
“While the Bank of Canada is clearly on high alert over the potential economic implications of the new coronavirus, recent indicators suggest the economy had decent underlying momentum at the start of the year,” Porter said.
The Bank of Canada kept its key interest rate target on hold last month at 1.75 per cent but left the door open to future rate cuts if weakness seen in the economy at the end of last year is more persistent than expected.
Porter said that if the economy does start to weaken due to the new coronavirus, he expects the Bank of Canada will move, but that the latest job numbers likely give the central bank a measure of comfort.
He added that average hourly wages in January were up 4.2 per cent compared with a year ago.
“This labour force report is very consistent in suggesting that there is some serious wage pressures building which frankly you would expect given an unemployment rate of 5.5 per cent,” he said.
Average hourly wage growth is one of several measures watched by the Bank of Canada, which aims to keep inflation in check.
The job growth in January was powered by the goods-producing sector as it gained 49,100 jobs. The manufacturing group added 20,500 jobs for the month, while the construction subsector added 15,800. Agriculture added 11,500.
Meanwhile, the services-producing sector lost 14,500 jobs, weighed down by the loss of 16,000 jobs in the health care and social assistance subsector.
The gain in jobs for the month came as the number of full-time jobs rose by 35,700, while part-time employment fell by 1,200.
Regionally, Quebec added 19,100 jobs in January, while Manitoba added 6,500 jobs. New Brunswick added 4,600. The number of jobs fell by 18,900 in Alberta.
CIBC senior economist Royce Mendes said the January jobs report built on a gain in December, suggesting that maybe the labour market rebounded from weakness around the turn of the year.
“That said, other indicators of the economy, in particular consumption, have looked soft. So the picture remains decidedly mixed,” Mendes wrote in a report.
“We’ll need to wait for the to-be-released payroll data to confirm the strength in hiring, and some of the activity indicators to see how persistent the slowdown in spending is.”
Compared with January 2019, the number of jobs in Canada increased by 268,000, or about 1.4 per cent.