Unemployment Rates
Bank of Canada’s scheduled policy rate announcement is due on September 6th, 2023, and homebuyers are eager to hear how cards will be dealt. Canada’s labour market is softening as the unemployment rate rises for a third consecutive month, offering some evidence the economy is finally slowing down. Wage inflation, however, re-accelerated, moving back to 5.0%. This, combined with the continued stickiness in core inflation, will keep interest rates high for longer.
Statistics Canada reported Friday employment was little changed in July, falling by 6,400 jobs. Meanwhile, the unemployment rate ticked up to 5.5 per cent as the economy struggles to create enough jobs to match the pace of population growth.
As Canada’s population continues to grow rapidly, rising unemployment signals the economy isn’t creating enough jobs to absorb a larger workforce. Job vacancies have also declined in the country, offering another sign that the labour market is loosening.
Bottom Line
The chances of a rate hike on September 6 have diminished significantly. However, we could be at a standstill with high interest rates for a longer period of time.
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Sources
Cooper, Sherry. “The Long-Awaited Labour Market Shutdown.” Sherry Cooper Assoc.,
https://sherrycooper.com/articles/weaker-than-expected-jobs-report-portends-no-rate-hike-by-boc/. Accessed 9 Aug. 2023.
“Signs of Economic Softening Grow as Job Creation Lags Population Growth.” City News Everywhere, 4 Aug. 2023, https://kitchener.citynews.ca/2023/08/04/statistics-canada-to-release-july-employment-figures-this-morning/#:~:text=OTTAWA%20—%20Canada%27s%20labour%20market%20is,July%2C%20falling%20by%206%2C400%20jobs. Accessed 9 Aug. 2023.
