Bank of Canada rate cut bets get boost from weak job numbers: What economists say

The uncertainty around tariffs and poor winter weather are to blame for Canada’s hiring slowdown in February, economists say, and that likely means more interest rate cuts by the Bank of Canada.

The unemployment rate held steady at 6.6 per cent in February, with the economy adding just 1,100 jobs during the month, according to Statistics Canada, which was lower than the 20,000 gain economists expected.

Market odds of a interest rate cut next week rose to 85 per cent after the data came out, up from about 75 per cent.

Employment in the retail, wholesale trade, finance, real estate and insurance sectors rose, but declined in the scientific and technical services, transportation and warehousing sectors.

Here’s what economists had to say about the labour data and what it means for policymakers.

February’s slow month for hiring marks the “first sign that tariff uncertainty” has hit the Canadian economy, according to Andrew Grantham, a senior economist at CIBC Capital Markets.

He said the decline in hours worked was largely the result of winter storms, but there was also some weakness in sectors most at risk from tariffs, such as transportation and warehousing and manufacturing.

Grantham said the Bank of Canada can’t solve the tariff issue with lower interest rates, but he expects policymakers to cut rates in March since that could help the economy transition towards other growth drivers.

“Given the stall in hiring during February, and ongoing uncertainty regarding tariffs that is likely to have larger negative impacts ahead, we continue to expect a 25-(basis-point) cut from the Bank of Canada next week,” he said in a note.

Both the weather and incoming tariffs are to blame for the lower-than-expected number of jobs created,