Canada: Economy is recovering lost jobs, outpacing the US and most other developed economies – Wells Fargo

Analysts at Wells Fargo point out the Canadian economy is outperforming relative to expectations. On Friday, the employment report is due and market consensus suggests an increase of 90K jobs in March. 

Key Quotes: 

“The Canadian economy has been strengthening over the past few months. Perhaps, most notable has been the improvement in local labor market dynamics, especially as it relates to February data. Last month, the Canadian economy created 259,200 jobs, well above consensus forecasts calling for just 75,000. In addition, the jobless rate fell to 8.2% from 9.4%, while the labor market participation rate held steady at close to 65%. Improvements in the labor market also contribute to our optimistic outlook on the Canadian economy, and if March employment data follow suit, the outlook could brighten even further.”

“Consensus estimates suggest another 90,000 jobs could be created in Canada and for the jobless rate to tick lower to 8.0%. As far as recovering lost jobs, the Canadian labor market is outpacing the United States and most other developed economies. With oil prices pushing higher and the domestic economy stabilizing, it is also possible more energy sector jobs are created in the months ahead. When sifting through March employment data, we will be cognizant of any revisions to February data purely given the size of the outperformance last month.”

“We believe the BoC is on pace for a rate hike earlier than the central bank is currently signaling and see a 25-bp hike in the second half of 2022. While our view on a 2022 rate hike is out of consensus