The Canadian economy added twice as many jobs as expected in December and the unemployment rate hit a 22-month low, though analysts see a grim January amid fresh restrictions to slow the fast-spreading Omicron variant of COVID-19.
Canada added a net 54,700 positions, beating analysts’ expectations of a gain of 27,500, while the jobless rate dipped to 5.9% from 6.0% in November, Statistics Canada said on Friday.
This was the lowest level since the 5.7% reported for February 2020, just before COVID-19 emerged. But the latest survey was completed in early December, before what Statscan called the “widespread emergence” of Omicron.
Several provinces have since clamped down, which could weigh on January’s numbers, analysts said.
“We’re still waiting for the other shoe to drop … this is not capturing Omicron sensitivities one bit,” said Derek Holt, head of capital markets economics at Scotiabank.
Holt noted the restrictions in Ontario and Quebec, the two most populous Canadian provinces, and also said unvaccinated workers were being laid off under vaccine mandates.
Toronto, the country’s most populous city, said this week it had fired 461 workers for not complying with a mandatory inoculation policy. The latest data from Canada’s federal civil service shows 775 people are unvaccinated and more than 3,000 have requested exemptions.
Still, economists say the overall employment trend is strong.
“To me it doesn’t change the big picture, which has been a very robust job market, a very strong recovery,” said Jimmy Jean, chief economist at Desjardins Group, noting that full-time jobs increased by 122,500, accounting for the entire net gain.
This was partially offset by the loss of 67,700 part-time jobs. The economy added 10,600 service-sector jobs and 44,200 jobs in the goods-producing sector. Canadian employment is now 240,500 jobs above pre-pandemic levels.
The Bank of Canada https://www.reuters.com/markets/us/bank-canada-says-likely-cut-rates-effective-lower-bound-more-often-2021-12-15 said last month that labor market slack had been absorbed to a significant degree, signaling a first interest rate hike could come soon. Money markets expect the central bank to start raising rates in March. [BOCWATCH]
“I think it does increase the pressure on the Bank of Canada to move more quickly, just incrementally,” said Andrew Kelvin, chief Canada strategist at TD Securities.
The Canadian dollar strengthened 0.3% to C$1.2694 per greenback, or 78.78 U.S. cents.
(Additional reporting by Steve Scherer in Ottawa and Fergal Smith in Toronto;Editing by Catherine Evans, Jonathan Oatis and Paul Simao)
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
OTTAWA – Canada’s inflation rate fell to two per cent last month, finally hitting the Bank of Canada’s target after a tumultuous battle with skyrocketing price growth.
The annual inflation rate fell from 2.5 per cent in July to reach the lowest level since February 2021.
Statistics Canada’s consumer price index report on Tuesday attributed the slowdown in part to lower gasoline prices.
Clothing and footwear prices also decreased on a month-over-month basis, marking the first decline in the month of August since 1971 as retailers offered larger discounts to entice shoppers amid slowing demand.
The Bank of Canada’s preferred core measures of inflation, which strip out volatility in prices, also edged down in August.
The marked slowdown in price growth last month was steeper than the 2.1 per cent annual increase forecasters were expecting ahead of Tuesday’s release and will likely spark speculation of a larger interest rate cut next month from the Bank of Canada.
“Inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate,” wrote CIBC senior economist Andrew Grantham.
Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said Tuesday’s figures “tilt the scales” slightly in favour of more aggressive cuts, though he noted the Bank of Canada will have one more inflation reading before its October rate announcement.
“If we get another big downside surprise, calls for a 50 basis-point cut will only grow louder,” wrote Reitzes in a client note.
The central bank began rapidly hiking interest rates in March 2022 in response to runaway inflation, which peaked at a whopping 8.1 per cent that summer.
The central bank increased its key lending rate to five per cent and held it at that level until June 2024, when it delivered its first rate cut in four years.
A combination of recovered global supply chains and high interest rates have helped cool price growth in Canada and around the world.
Bank of Canada governor Tiff Macklem recently signalled that the central bank is ready to increase the size of its interest rate cuts, if inflation or the economy slow by more than expected.
Its key lending rate currently stands at 4.25 per cent.
CIBC is forecasting the central bank will cut its key rate by two percentage points between now and the middle of next year.
The U.S. Federal Reserve is also expected on Wednesday to deliver its first interest rate cut in four years.
This report by The Canadian Press was first published Sept. 17, 2024.
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
