The Daily Chase: Surprise job gains

Here are five things you need to know this morning.

Canada adds jobs: Canada’s job market was hotter than expected in January, with 37,000 new jobs added during the month. Most of the gains were in part-time work, but nonetheless the strong jobs print was more than twice what economists were expecting. The job surge was enough to push down Canada’s unemployment rate for the first time in a year, by one tick to 5.7 per cent. What does it all mean? Depends who you ask. Given persistent high inflation and corresponding high lending rates, every data point on the economy right now gets viewed through the prism of what the Bank of Canada might do because of it. And on that front, the views are mixed. TD Bank said despite the headline, the details of the job report were a bit weak, and when it’s all added up the employment numbers won’t compel the central bank to change course from its current expectation of cutting rates some time later this year. CIBC, meanwhile, says the jobs number coupled with recent GDP data, shows the economy is “in somewhat better shape than previously expected” and as a result the bank is forecast one fewer rate cuts this year, with the BOC finishing 2024 at 3.75 per cent.

S&P 5000: We’ve been watching and waiting for it all week and on Thursday (and then again for good on Friday) the S&P 500 hit the 5,000-point level for the first time ever. While “5,000 points” obviously makes for a better headline than “rose 0.15 per cent on Friday” hitting the level is a key moment for investors, if only psychologically. With uncertainty all around, a wobbly economy, global geopolitics and – oh yes – a U.S. presidential election looming, investors continue to push up stock prices showing optimism is still out there despite it all. The TSX could perhaps use some of that positive thinking for itself as Canada’s benchmark stock index is moving mostly sideways this year, and is about 1,000 points off the all-time high it hit back in 2022 above 22,000. Barring a 100+ point surge on Friday you can likely safely shelve those “TSX 21,000” novelty hats for now.

Enbridge: Canada’s biggest pipeline company posted earnings before the bell on Friday, and the numbers mostly met expectations, sending the shares up modestly in early trading. While the company’s debt load is still eye-opening, National Bank Financial analyst Patrick Kenny said it is heading in the right direction as the company’s debt-to-EBITDA ratio was 4.1 at the end of 2023. That’s below the company’s forecast of between 4.5-5 per cent. While overall the numbers were a bit of a mixed bag, from an investor standpoint the main driver of Enbridge’s share is often the dividend, and the company had some good news for owners on that front. The quarterly payout was boosted by 3.1 per cent to 91.5 cents per share per quarter or $3.66 annually. At current prices, Enbridge shares are yielding almost 8 per cent.