Canada: Despite weak job numbers, another BoC rate hike still possible – CIBC

Canada’s employment report released on Friday showed weaker-than-expected figures, with an unexpected drop in net employment. CIBC Analyst He notes that weak headline numbers may call into question the Bank of Canada’s apparent commitment to further hike interest rates, but notes that the numbers could rise in the coming months due to employment in education.

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“The summer lull in the Canadian labor market continued, with 40,000 job losses marking the third consecutive monthly drop. However, unlike the previous two months, the latest decline cannot easily be viewed as the result of a shortage. In fact In the U.S., the participation rate increased in August, meaning that the reduction in employment pushed the unemployment rate to 5.4% from the previous month’s 4.9%. With a tendency to experience volatility in the summer months, we suspect that today’s weak headline numbers will change the Bank of Canada’s commitment to continue raising interest rates.”

“The job decline during the month of August was focused on full-time jobs (-77,000) and the public sector (-28,000). By sector, the 28,000 job decline in construction (the first fast-growing sector) indicates that the increase in interest rates The labor market is being impacted. However, the loss of nearly 50,000 jobs in the education sector is more likely to represent difficulties in seasonal adjustment within the sector, and as a result we should see a rebound in the coming months.”

“Weak headline figures may make the Bank of Canada question its apparent commitment to further increase interest rates. However, with a large drop in employment in the education sector that could reverse in the future, and another loss of the workforce. Ahead of the bank’s October meeting with the survey, it is still likely that there will be at least one more rate hike before seeing a stagnation.”

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