Economy adds 22,000 jobs in February, unemployment steady at 5%

Statistics Canada says employment rose slightly in February as the economy added 22,000 jobs.

In its labour force survey Friday, the federal agency says the unemployment rate held steady at five per cent last month, hovering near record-lows.

The bulk of the job gains were made in health care and social assistance, public administration and utilities. Meanwhile, jobs were lost in business, building and other support services.

In February, the gap between wage growth and inflation narrowed, with average hourly wages up 5.4 per cent compared with a year ago.

For the third month in a row, the labour market added more jobs than forecast, with 150,000 jobs in January, beating out forecasts significantly, and nearly 70,000 in December.

While the good news continues for the labour market, the bad news is that this could mean that borrowing costs could go up again, and also continue to fuel wage inflation to an economy that is still overheating in the eyes of the Bank of Canada.

At its latest interest rate announcement, the Bank of Canada held its key rate steady at 4.5 per cent, the highest it’s been since 2007.

It has warned interest rates are only on hold if it starts to see the economy start to slow down. Otherwise, it is going to continue raising interest rates until it has a dampening effect on the jobs market and price pressures.

The Bank of Canada, which is working to bring down the country’s high inflation rate, has raised concerns that sustained four to five per cent wage growth will make it harder to return to its two per cent inflation target.

But the central bank says it expects the labour market to ease in the coming months, as higher interest rates slow spending by people and businesses.