Modest March jobs growth stems ‘bleeding’ in the labour market: economists

“We’re not adding that many jobs, we don’t really have that much in terms (of) labour force growth either. And that’s keeping the unemployment rate fairly stable, albeit at a level that we still think is elevated,” Grantham said.

Growth in March was led by a category StatCan calls “other services,” which includes repair and maintenance work in the economy.

The professional, scientific and technical services sector, the natural resources industry and tariff-sensitive manufacturing also posted job gains in the month.

Year-over-year, the manufacturing sector has shed 44,000 positions compared with March 2025 when the United States first imposed tariffs on Canadian steel, aluminum and autos.

Grantham said employment in tariff-stricken sectors seems to have stabilized at a lower level, but other parts of the economy aren’t really adding jobs either right now.

The finance, insurance, real estate and leasing sector and the food and accommodations industry led losses in March.

Marc Desormeaux, vice-president of policy and economist at the Business Council of Canada, said in an email Friday that the latest labour force data suggest tariff softness has spilled into the services side of the economy.

“The bleeding stopped after two consecutive monthly employment declines, but March’s data continue the trend of soft labour market performance to start this year,” he said.

A loss of 19,000 jobs in British Columbia last month followed a similar loss in February, pushing the province’s unemployment rate up to 6.7 per cent. That’s the highest level for the province’s jobless rate in about a decade, outside the COVID-19 pandemic.

Average hourly wages across the country, meanwhile, rose 4.7 per cent year-over-year — a jump from 3.9 per cent in February and the fastest pace since October 2024.

StatCan said some of the recent increase in wages is due to the “composition of employment,” meaning the economy isn’t adding or maintaining as many lower-paying jobs that typically pull down the wage growth average.

Controlling for compositional factors leaves average annual wage growth at 3.6 per cent in March, StatCan said, roughly in line with January and February’s figures.

Grantham cautioned not to expect the same pace of pay growth as the economy remains sluggish.

“It was a surprise that we saw such a big acceleration today, but unfortunately I don’t think that will last, given general softness in some other labour market indicators,” he said.

Friday’s data marks the Bank of Canada’s last look at the labour market before its next interest rate decision on April 29. The central bank held its benchmark interest rate steady at 2.25 per cent in March.

Bets on an April rate cut rose somewhat in financial markets after Friday’s jobs report, but odds were still nearly 93 per cent in favour of a hold from the Bank of Canada at the end of the month, according to LSEG Data & Analytics.

TD Bank senior economist Andrew Hencic said in a note to clients Friday that the outlook for the economy “remains fraught” with the Iran war’s energy shock roiling prices and no clarity over the direction of the conflict despite hopes for a lasting ceasefire.

He said weak demand in the sluggish economy should offset some of the inflationary impact from the war, allowing the Bank of Canada to stay on the sidelines for now.

“With the economy continuing to progress in fits and starts, and uncertainty sky-high, the outlook is for subdued job growth and a steady unemployment rate,” Hencic said.

Grantham agreed that the Bank of Canada remains in “wait-and-see” mode after Friday’s mild jobs report.

Absent the Iran war oil shock, he said the central bank might have been thinking about interest rate cuts right now to support the economic recovery.

But now monetary policy-makers have to be prepared to guard against the possibility of spreading inflation pressures from the war, which Grantham said has tied their hands when it comes to lowering the policy rate.

He noted, however, that a soft labour market helps to insulate the economy against widespread inflation.

“Given the fact that the labour market is quite weak, that will make it harder for an energy price shock to become broader inflationary pressures. So we still think the Bank of Canada can and will remain on hold throughout this year and just see how things unfold,” Grantham said.

This report by The Canadian Press was first published April 10, 2026.

Craig Lord, The Canadian Press

by The Canadian Press

Modest March jobs growth stems ‘bleeding’ in the labour market: economists

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