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69,000 new Jobs in January

A huge print for Canada, 69k is the equivalent of 600,000 jobs in the U.S. (they are hoping for $150k… later this morning).  This will create an opportunity for the Bank of Canada to raise interest rate prior to May 2011 (the initial date on which the market anticipated that Carney & Friends would begin considering interest rate hike).


As usual, the “good feeling” has lead to an increase in the unemployment rate as more Canadians are encouraged to look for work (yes a perverse effect, nevertheless, it is what it is).  Over the past 12 month, employment in Canada rose by 1.9% (+327k jobs).  On the down side of the equation, half the jobs created in January were part time. 


Women over the age of 25 were the biggest winners here accounting for a large percentage of the total increase in new jobs (80%).  In terms of geographical distribution Ontario was the big winner, followed by Alberta (not entirely surprising with oil prices over $90/bbl).  Quebec (Canada’s second most populous province) saw little change in employment, but then it was less affected than the other provinces from the recession, and saw massive increase in employment during 2010 (+2.3%).

The employment numbers result will provide the Bank of Canada proof that Canadians can sustain normalized interest rates, so that the short term rate can rise back to the 2.5% level (equal to the rate of inflation).  I would suspect that the BoC will continue with its 25 bps incremental interest rate policy, with a June 2011 short term target of 1.5% (50bps rise.  I would put the probability of a 25bps rise on March 1st at 80% and a 50 bps at around 40%.

(Graph source:  Statistics Canada)

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