The Bank of Canada today maintained its target for the overnight rate at the effective lower bound of ¼ percent. The Bank Rate is correspondingly ½ percent and the deposit rate is ¼ percent.
Incoming data confirm the severe impact of the COVID-19 pandemic on the global economy. This impact appears to have peaked, although uncertainty about how the recovery will unfold remains high. Massive policy responses in advanced economies have helped to replace lost income and cushion the effect of economic shutdowns. Financial conditions have improved, and commodity prices have risen in recent weeks after falling sharply earlier this year. Because different countries’ containment measures will be lifted at different times, the global recovery likely will be protracted and uneven.
In Canada, the pandemic has led to historic losses in output and jobs. Still, the Canadian economy appears to have avoided the most severe scenario presented in the Bank’s April Monetary Policy Report (MPR). The level of real GDP in the first quarter was 2.1 percent lower than in the fourth quarter of 2019. This GDP reading is in the middle of the Bank’s April monitoring range and reflects the combined impact of falling oil prices and widespread shutdowns. The level of real GDP in the second quarter will likely show a further decline of 10-20 percent, as continued shutdowns and sharply lower investment in the energy sector take a further toll on output. Decisive and targeted fiscal actions, combined with lower interest rates, are buffering the impact of the shutdown on disposable income and helping to lay the foundation for economic recovery. While the outlook for the second half of 2020 and beyond remains heavily clouded, the Bank expects the economy to resume growth in the third quarter.
CPI inflation has decreased to near zero, as anticipated in the April MPR, mainly due to lower prices for gasoline. The Bank expects temporary factors to keep CPI inflation below the target band in the near term. The Bank’s core measures of inflation have drifted down, although by much less than the CPI, and are now between 1.6 and 2 percent.
The Bank’s programs to improve market function are having their intended effect. After significant strains in March, short-term funding conditions have improved. Therefore, the Bank is reducing the frequency of its term repo operations to once per week, and its program to purchase bankers’ acceptances to bi-weekly operations. The Bank stands ready to adjust these programs if market conditions warrant. Meanwhile, its other programs to purchase federal, provincial, and corporate debt are continuing at their present frequency and scope.
As market function improves and containment restrictions ease, the Bank’s focus will shift to supporting the resumption of growth in output and employment. The Bank maintains its commitment to continue large-scale asset purchases until the economic recovery is well underway. Any further policy actions would be calibrated to provide the necessary degree of monetary policy accommodation required to achieve the inflation target.
Tiff Macklem assumes his role as the Bank’s tenth Governor today. He participated as an observer in Governing Council’s deliberations for this policy interest rate decision and endorses the rate decision and measures announced in this press release.
The next scheduled date for announcing the overnight rate target is July 15, 2020. The next full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR at the same time.
Canada’s economy creates almost 1 million jobs in June – Canada Immigration News
Lifting coronavirus-related lockdown restrictions around the country has sparked the beginning of Canada’s economic recovery.
Many Canadians and permanent residents returned to work for their previous employers while others started new jobs.
Between February and April, a total of 3 million people lost their jobs due to the lockdown, and another 2.5 million were absent from work due to coronavirus-related reasons, according to a Statistics Canada report published on Friday.
May saw a slow start of economic recovery as 290,000 people returned to work. Building on this, the month of June helped alleviate low unemployment rates across the country as employment increased by a record 953,000 people.
These last two months saw the labour market recover by a staggering 40%. Over 1.24 million people gained employment, after 3 million people lost their jobs earlier in the year.
Canada’s overall unemployment rate dropped from 13.7% in May to 12.3% in June.
In addition, the report says that labour force participation rate has increased substantially over the last two months up to 63.8% in June. In comparison, it was 65.5% in February, before coronavirus-related restrictions.
The labour force participation rate is the percentage of the population, aged 15 or older, who are part of the labour force.
This suggests that many people are now more optimistic about the potential of finding a job. The Canada Emergency Student Benefit (CESB)’s requirement to actively search for work may be another factor. The CESB was introduced to alleviate financial struggles of students who may have been affected by the coronavirus-related restrictions
Moreover, the number of people who work less than half of their usual hours also decreased in June to 26.9% down from 34.3%.
The rise of employment across all provinces is largely aligned with the easing of lockdown restrictions.
Employment in Ontario increased by 378,000 (or 5.9%), Quebec by 248,000 (or 6.5%) and British Columbia by 118,000 (or 5.4%).
As Canada begins reopening its economy, many Canadians and permanent residents have returned to work or have begun looking for work.
In addition, Immigration, Refugees and Citizenship Canada (IRCC) has returned to normal in terms of Express Entry draws. The latest draw held was an all-program draw. This means that candidates for the Federal Skilled Worker Program (FSWP) and the Federal Skilled Trades Class (FSTC) were also considered.
Since the travel restrictions were put in place to slow the spread of the coronavirus pandemic, IRCC had been holding program-specific draws, alternating between Provincial Nominee Program (PNP) draws and Canadian Experience Class (CEC) draws.
Canada’s latest job statistics is good news for these immigrants since they can expect a stronger job market once they have obtained permanent residence.
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COVID-19: Alberta reports 77 new cases on Friday, death count falls by 1 – CTV News
Alberta reported 77 new cases of COVID-19 on Friday, bringing its total number of cases to 8,596.
There are 592 active cases across the province and 7,844 people have recovered from the coronavirus.
The province’s death count fell by one on Friday, from 161 to 160. The number of COVID-19-related deaths fell from 18 to 17.
“One of the deaths reported at the Misericordia has been determined to not have COVID-19 as a contributing cause of death,” a spokesman for the province told CTV News.
The city of Edmonton has now surpassed 1,000 total cases, with 1,001. Its number of active cases sits at 173.
More than 510,000 COVID-19 tests have now been completed in Alberta.
Edmonton, Calgary top Canadian cities in unemployment – CTV News Edmonton
Alberta has the second-worst provincial unemployment rate in Canada after Newfoundland and Labrador..
According to new Statistics Canada data, unemployment reached 15.5 per cent in June.
It marks an 8.8 per cent difference from the same time last year.
The only province with a higher unemployment rate is Newfoundland and Labrador, at 16.5 per cent.
And unemployment in Alberta’s largest cities is also highest among Canadian major urban centres: about 15.7 per cent of the Edmonton workforce is currently unemployed, and 15.6 per cent of the Calgary workforce.
In May, their unemployment rates were 13.6 per cent and 13.4 per cent, respectively.
The news comes alongside a report that Canada added 953,000 jobs in June as businesses forced to close by the pandemic began to reopen.
“That’s important progress but we have a long way to go,” Alberta Premier Jason Kenney commented Friday at a news conference in Fort Saskatchewan, where a carbon capture and storage facility recently reached the five-million equivalent tonnes milestone.
Kenney’s government’s economic recovery plan centres on infrastructure projects that create jobs and making Alberta an attractive place for investment – as does the facility at the Shell Scotford complex, Kenney said.
“Projects like this are a key part of Alberta’s recovery plan to build, to diversify, and to create jobs. When the global economy comes back form COVID, when demand returns for oil and gas, we are going to see, I believe, something of a supply shortage because of all the upstream exploration that has been cancelled, and so we’ll see prices go up. And that will be a great opportunity for Alberta, especially as we make progress on pipelines,” he said.
“But there’s one critical factor, we’ve got to bring investment back. And that means we’ve got to demonstrate our progress on environmental responsibility which is why investments like this… are so important to jobs, the economy, and the future prosperity of Alberta.”
The national unemployment rate fell to 12.3 per cent after hitting a record-high of 13.7 per cent in May.
With files from CTVNews.ca
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