N.B. adds 7,800 jobs in April, but it may hurt possibility of interest rate cut

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New Brunswick added 7,800 jobs in April, a figure that has partly reversed an unemployment rate that had been climbing each month this year.

The gains were part of a largely unexpected 90,000 jobs added across the country last month, which now has economists questioning whether the Bank of Canada will cut interest rates if the economy is again heating up.

Newly released labour force data shows that New Brunswick’s unemployment rate dropped to seven per cent last month.

That was after a series of months where indicators were going the other way.

Unemployment was 7.8 per cent in March, its highest level in over two years. Prior to that, it was 6.9 per cent in February and 6.6 per cent in January.

New Brunswick was one of only four provinces that recorded material employment gains in April.

It had the largest percentage jump in the country.

Employment increased in Ontario by 25,000 or 0.3 per cent, while British Columbia recorded 23,000 job gains, a 0.8 per cent increase, and Quebec, 19,000, a 0.4 per cent gain.

The jobs jump in New Brunswick in April amounted to a two per cent bump.

Unemployment across the country was unchanged at 6.1 per cent as a total of 90,000 jobs were added.

New Brunswick’s unemployment rate had been increasing, though it wasn’t due to job losses.

Instead, job growth has repeatedly been outstripped by the growing size of the labour force as the province continues to welcome thousands of newcomers.

New Brunswick’s labour force, the number of people with a job or looking, has grown by 19,100 people over the last year.

That’s as the province added 15,300 new jobs.

In April, the labour force grew by another 4,700 people, but this time the economy added 7,800 jobs.

A total of 4,900 were full-time positions.

The gains were widely unexpected.

“What?!!” wrote James Orlando, director of economics at TD Bank, in a note to investors. “Following March’s slight contraction, today’s big jump was more than four times the consensus expectation.

“Even for this notoriously volatile data, this was a shocker.”

The 90,000 jobs equate to the largest employment gain in 15 months, Orlando noted, while adding the report is “likely to raise eyebrows at the Bank of Canada.”

“The central bank has been looking for evidence that inflation will continue moving towards the two per cent target,” Orlando said. “With the labour market showing renewed strength, there is potential for consumer spending to rise in the coming months, forcing inflation higher.”

That threatens the potential of a long-awaited interest rate cut.

The bank left rates unchanged for the sixth straight time in April following 10 increases that began two years ago, all in order to hike borrowing costs in attempts to weigh down consumer spending and slow the rising cost of everything.

The Bank of Canada’s next rate decision on June 5.

“Today’s showy headline jobs increase will give the Bank of Canada some pause, since it reinforces the point that the economy is clearly not rolling over,” Bank of Montreal chief economist Doug Porter said in a note to clients.

“Markets are now back to viewing the June rate decision as a toss-up.”