Canada’s economy gains momentum amid record-high job creation

Canada’s economy gains momentum amid record-high job creation
# 11 May 2019 16:33 (UTC +04:00)

Canada has seen a massive rise in gainful employment amid the declining jobless rate and rising wages, all of which are set to contribute to higher consumer confidence and spending, and boost business activity in the manufacturing and services sectors this year, ONA reports citing Sputnik.

According to Statistics Canada, the nation's employers added 106,500 jobs in April, the greatest one-month increase in employment since 1976, when the government started to record such data. The majority of these new jobs are full-time.

Canada's unemployment rate dropped to 5.7 percent in April, in line with the rise in job-creation, compared to a 5.8 percent jobless rate the previous month. A separate measure of gainful employment added 0.6 percent, the highest such jump since 1994.

Additionally, Canada's growth in salaries and wages rose at its quickest pace since the summer of 2018, boosting effective disposable household incomes. This, in turn, is expected to translate into higher consumer confidence and spending numbers in the current quarter.

In currency markets, the Canadian dollar, known as the loonie, rose 0.7 percent against a basket of its major peers, while yields on two-year Canadian government bonds rose 0.04 percent to 1.62 percent. These figures reflect improved investor confidence in the Canadian economy in the wake of the jobs report, which is poised to drive the influx of capital and GDP growth as well.

Over the past year, Canada has created 426,400 jobs, the biggest one-year gain since 2007; almost a quarter of these were added last month alone.

Meanwhile, economists have warned that Canada is facing the risk of a recession despite the positive labor market dynamics. The new North American trade agreement, known as the USMCA, has yet to be ratified and go into effect; in the meantime, US tariffs on Canadian industrial metals have yet to be lifted.

Additionally, the volatility in international oil prices, higher borrowing costs, a slowdown and higher prices in the housing market could all contribute to a slowdown in Canada's GDP expansion.

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