The deficit of C$1.02 billion ($1 billion) followed a January figure that was revised to C$746 million from C$237 million, Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg forecast the string would end with a C$100 million surplus, based on the median of 21 forecasts.
“Obviously disappointment on both sides of the border,” said David Tulk, chief macro strategist at Toronto-Dominion Bank’s TD Securities unit by phone from Toronto. “The labor market is sort of catching up to the wider economic backdrop that we’ve always argued is still quite subdued, so this helps a little bit.”
In the U.S., Canada’s largest trading partner, the absence of sustained and bigger gains in employment and earnings underscores the Federal Reserve’s view that more progress is needed before record monetary policy stimulus that has devalued the currency can be scaled back.
Fed officials are waiting for sustained signs of job-market resilience before winding down their $85 billion of monthly bond purchases. Central bank policy makers reiterated in a March 20 statement that they would continue to buy securities until the labor market outlook improves “substantially.”
The Canadian dollar has gained 0.7% in the last month against nine developed-nation currencies tracked by the Bloomberg Correlation-Weighted Index. The U.S. dollar has had little change and the euro has lost 0.5%.