Published by Sherry Cooper
Sherry Cooper: Latest employment numbers justify BoC’s current strategy.
Labour market strength was readily apparent across the major North American economies
Canada’s labour market performance in September is strong enough to keep the central bank on its hawkish rate-hike path, according to economist Sherry Cooper.
The market saw the addition of approximately 21,000 jobs last month, with increases in both full-time and part-time work. Wage rates also increased by 5.2% annually, marking the fourth consecutive month of income gains above 5%.
This was accompanied by fresh US employment data indicating that the jobless rate fell from 3.7% in August to 3.5% in September.
The strong employment sector across the major North American economies “[does] nothing to deter the central banks from their rate-hiking paths,” Cooper said.
“This is the last employment report before their decision dates – October 26 for the Bank of Canada and November 2 for the Fed – although we will see the release of inflation and housing data before they meet again. It is already baked into the cake that rate hikes will continue.”
However, with the BoC’s rate increases at the steepest level they have been since the mid-1990s, observers are warning that consumer spending might plummet soon.
The housing market “has already started crumbling,” said Julia Wendling of Rosenberg Research. “We think that’s going to continue, and that’s it’s going to ultimately lead the Bank of Canada to realize that the Canadian economy, as indebted as it is, cannot support these higher interest rates.”
Wendling called on the central bank to temporarily freeze its hikes after its next interest rate announcement later this month.