Canada's unemployment rate surged to 6.1% in March, rising from 5.8% in February, the largest increase since summer 2022.
According to Statistics Canada’s labour force survey, the job market shed 2,200 jobs last month amidst a backdrop of high interest rates and robust population growth.
Youth employment suffered notably, with a decline of 28,000 jobs and a 12.6% unemployment rate.
Job losses were concentrated in accommodation, food services, wholesale and retail trade, and professional services. Conversely, employment increased in health care and social assistance.
Despite weaker conditions, wage growth remains strong at 5.1% annually.
Wage growth still a concern
The report precedes the Bank of Canada's interest rate decision, with expectations shifting towards an earlier rate cut, potentially in June, in response to the labor market's downturn.
"The increase in the unemployment rate, along with the recent downward trend in core inflation, clears the way for the BoC to start a cutting cycle soon," analysts at Bank od America wrote in reaction to March's job figures.
"Although the downward surprise in the labor market increases the chance of an April cut, we still believe the BoC will likely wait for confirmation of a 'sustained' downward trend in core inflation.
"Also, the resilience of wage growth is still a concern for the BoC. We continue to expect a dovish turn in April and the first cut to happen on June. We expect the BoC to cut faster and deeper than the Fed this year. We have the BoC policy rate at 3.75 by year end, even if the Fed takes longer to cut than June."
--Updated with analyst comment--