With only one day ahead of the Non-Farm Payrolls (NFP) release in the United States, Canadian jobs data surprised the market participants. Every detail in today’s job report was positive for the Canadian economy. Hence, the Canadian dollar welcomed the news and surged across the board.
Tomorrow is a bank holiday in Canada in observance of Good Friday. Therefore, instead of being released tomorrow, as it should have been, the employment data for March 2023 was released today. Also, the Ivey PMI, a key measure of economic activity in Canada, came out today too.
Both pieces of economic data exceeded their forecasts. As a result, traders bought the Canadian dollar, and more strength should lie ahead.
The Canadian economy added three times more jobs than expected in March
As it turns out, the Canadian economy added way more jobs than forecast in March – 35k vs. 10.2 k expected. Moreover, the unemployment rate held steady at 5.0%, while economists expected a small increase to 5.1%.
Transportation and warehousing, business, building, and other support services, added +6.6% more jobs in March. Also, finance, insurance, real estate, rental, and leasing added 1.3% more jobs. On the flip side, employment declined in construction by -1.2% and in natural resources by -3.2%.
Strong employment data in Canada may lead to investors hoping for the same outcome tomorrow when the US NFP report is due. As such, movements in the FX market were mixed, especially because of the poor liquidity due to the Easter holidays.
Ivey PMI blows out expectations
Perhaps an even bigger surprise came from the Ivey PMI report. The Ivey PMI is an index measuring the monthly variation in economic activity.
Its name comes from the Ivey Business School, which conducts the survey. It has great predictive power for the Canadian macro activity, and in March, it came out at 58.2 vs. 52.0 expected – a huge difference.
While above 50, the index shows economic expansion. Below 50, it shows economic contraction.
Employment was higher than the previous month, as shown by the Ivey Employment Index, which rose to 60.3 vs. 59.4 in the last month. Moreover, the Ivey Prices Index dropped to 62.0 vs. 65.3 previously.
All in all, March data points to solid economic performance. Therefore, the Bank of Canada should feel vindicated that the rate hikes did not have such a negative impact on economic activity as many have feared.
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