OTTAWA (Reuters) – Canada added more than twice the number of jobs than expected in January, the latest indication that the economy could be strong enough to persuade the Bank of Canada not to cut rates next month.

Statistics Canada said on Friday that 34,500 jobs had been created in January, the second straight month of healthy gains after a record loss in November. The unemployment rate dipped to a near record low 5.5%.

Analysts polled by Reuters had forecast a gain of 15,000 positions and for the jobless rate to stay at 5.6%.

The Bank of Canada has held its key interest rate steady since October 2018 but said last month a cut was possible if a recent slowdown in domestic growth persisted. The bank’s next scheduled rate announcement is March 4.

Derek Holt, vice president of capital markets economics at Scotiabank, said the data was better than expected.

“I think it’s strong enough to give the Bank of Canada a little bit more encouragement and maybe hold off (on cutting rates) in March,” he said in a phone interview.

Market expectations of an interest rate cut in March, as reflected in the overnight index swaps markets, dipped to 10.89% from 12.89% before the data was released.

All the gains were in full-time jobs, said Statscan. The goods-producing sector added 49,100 positions – almost half of them in manufacturing – while the service sector shed 14,500.

The hourly wages for permanent employees – a number closely watched by the Bank of Canada – rose by 4.4% compared with January 2019 and were up from 3.8% in December.

“(It’s a) pretty solid number seeming to indicate that the Canadian economy isn’t losing too much steam, so a positive start to the year in that regard,” said Josh Nye, a senior economist with RBC Economics.

“We think that slow growth leaves the door open to the Bank of Canada lowering interest rates. This jobs number this morning perhaps gives them a bit less urgency to do that.”

Related Coverage

• Canada gains 34,500 jobs in January, jobless rate falls to 5.5%

Recent data showed the economy surprisingly grew in November, the trade deficit narrowed in December and manufacturing activity expanded in January for the fifth straight month.

The Canadian dollar briefly rose to 1.3284 against the greenback, or 75.28 U.S. cents, from 1.3314, or 75.11 U.S. cents, before falling back.

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