adplus-dvertising
Connect with us

Economy

Canadian economy added 41,000 jobs in April: StatCan

Published

 on

OTTAWA –

The labour market is showing no signs of the slowdown the Bank of Canada is hoping for to get inflation down to two per cent, something economists say could force the central bank to get off the sidelines and raise rates again.

Statistics Canada’s latest labour force survey revealed Friday the economy continued to add jobs in April while wage growth outpaced inflation.

Employment rose by 41,000 jobs in April, but with all the gains made in part-time work.

300x250x1

Meanwhile, the unemployment rate held steady at 5.0 per cent for the fifth consecutive month. That’s just above the all-time low of 4.9 per cent reached last summer.

In a client note sent out Friday morning, BMO chief economist Douglas Porter said the latest jobs report once again shows “no evidence that the labour market is softening at all.”

“If this persists through the spring, the Bank of Canada may yet be forced to rethink its rate pause, especially with the housing market showing signs of reviving.”

The Bank of Canada paused its interest rate hiking cycle earlier this year, encouraged by slowing inflation. With its key interest rate sitting at 4.5 per cent, higher borrowing costs should force people and businesses to pull back on spending, and employers to rethink their hiring plans.

But so far, the labour market has remained resilient, despite previous forecasts for the economy predicting a slowdown to start the year.

The central bank has been warning that a tight labour market will make it more difficult to get inflation back to its target of two per cent, as higher wages could put upward pressure on prices.

TD director of economics James Orlando said the details in the jobs report are “mixed.” The economy continued to add jobs, but only part-time work. Moreover, population growth has been propping up employment numbers for months as Canada welcomes more immigrants.

And although the unemployment rate hasn’t budged, Orlando said there are signs that hiring isn’t happening as broadly in the economy.

“In the last three months, we went from almost 90 per cent of sectors hiring to 69 per cent of sectors hiring right now,” he said.

The job gains in April were led by the wholesale and retail trade industry, while the largest losses occurred in business, building and other support services.

The tight labour market is also putting upward pressure on wages. Average hourly wages were up 5.2 per cent on a year-over-year basis, growing faster than inflation.

The annual inflation rate in March was 4.3 per cent and is expected to fall to about three per cent by mid-year.

High wage growth is pushing the Bank of Canada to remain hawkish in its communications on monetary policy, even as it holds its key interest rate steady.

During a speech on Thursday at the Toronto Region Board of Trade, Bank of Canada governor Tiff Macklem addressed the labour market tightness.

“Most wage growth measures remain around the four to five per cent range. Unless productivity growth surprises us with a strong increase, persistent wage growth in that range will make it difficult to achieve the two per cent inflation target,” Macklem said.

Last month, the Bank of Canada’ governing council discussed raising rates again, but opted to remain on hold.

Orlando said if the economy continues to resist the slowdown the Bank of Canada is trying to engineer, interest rates may not be high enough.

“Maybe the Bank of Canada has to reassess what the proper level or the policy rate is to actually bring the economy to the economic slowdown that’s needed to get inflation back (down),” Orlando said.

This report by The Canadian Press was first published May 5, 2023.

 

728x90x4

Source link

Continue Reading

Economy

U.S. economic growth for last quarter revised up slightly to healthy 3.4% annual rate – The Globe and Mail

Published

 on


The U.S. economy grew at a solid 3.4 per cent annual pace from October through December, the government said Thursday in an upgrade from its previous estimate. The government had previously estimated that the economy expanded at a 3.2 per cent rate last quarter.

The Commerce Department’s revised measure of the nation’s gross domestic product – the total output of goods and services – confirmed that the economy decelerated from its sizzling 4.9 per cent rate of expansion in the July-September quarter.

But last quarter’s growth was still a solid performance, coming in the face of higher interest rates and powered by growing consumer spending, exports and business investment in buildings and software. It marked the sixth straight quarter in which the economy has grown at an annual rate above 2 per cent.

300x250x1

For all of 2023, the U.S. economy – the world’s biggest – grew 2.5 per cent, up from 1.9 per cent in 2022. In the current January-March quarter, the economy is believed to be growing at a slower but still decent 2.1 per cent annual rate, according to a forecasting model issued by the Federal Reserve Bank of Atlanta.

Thursday’s GDP report also suggested that inflation pressures were continuing to ease. The Federal Reserve’s favoured measure of prices – called the personal consumption expenditures price index – rose at a 1.8 per cent annual rate in the fourth quarter. That was down from 2.6 per cent in the third quarter, and it was the smallest rise since 2020, when COVID-19 triggered a recession and sent prices falling.

Stripping out volatile food and energy prices, so-called core inflation amounted to 2 per cent from October through December, unchanged from the third quarter.

The economy’s resilience over the past two years has repeatedly defied predictions that the ever-higher borrowing rates the Fed engineered to fight inflation would lead to waves of layoffs and probably a recession. Beginning in March 2022, the Fed jacked up its benchmark rate 11 times, to a 23-year high, making borrowing much more expensive for businesses and households.

Yet the economy has kept growing, and employers have kept hiring – at a robust average of 251,000 added jobs a month last year and 265,000 a month from December through February.

At the same time, inflation has steadily cooled: After peaking at 9.1 per cent in June 2022, it has dropped to 3.2 per cent, though it remains above the Fed’s 2 per cent target. The combination of sturdy growth and easing inflation has raised hopes that the Fed can manage to achieve a “soft landing” by fully conquering inflation without triggering a recession.

Thursday’s report was the Commerce Department’s third and final estimate of fourth-quarter GDP growth. It will release its first estimate of January-March growth on April 25.

Adblock test (Why?)

728x90x4

Source link

Continue Reading

Economy

Canadian economy starts the year on a rebound with 0.6 per cent growth in January – CBC.ca

Published

 on


The Canadian economy grew 0.6 per cent in January, the fastest growth rate in a year, while the economy likely expanded 0.4 per cent in February, Statistics Canada said Thursday.

The rate was higher than forecasted by economists, who were expecting GDP growth of 0.4 per cent in the month. December GDP was revised to a 0.1 per cent contraction from zero growth initially reported.

January’s rise, the fastest since the 0.7 per cent growth in January 2023, was helped by a rebound in educational services as public sector strikes ended in Quebec, Statistics Canada said.

300x250x1
WATCH | The Canadian economy grew more than expected in January: 

Canada’s GDP increased 0.6% in January

41 minutes ago

Duration 2:20

The Canadian economy grew 0.6 per cent in January, the fastest growth rate in a year, while the economy likely expanded 0.4 per cent in February, Statistics Canada says.

“The more surprising news today was the advance estimate for February,” which suggested that underlying momentum in the economy accelerated further that month, wrote CIBC senior economist Andrew Grantham in a note.

Thursday’s data shows the Canadian economy started 2024 on a strong note after growth stalled in the second half of last year. GDP was flat or negative on a monthly basis in four of the last six months of 2023.

More time for BoC to assess

The strong rebound could allow the Bank of Canada more time to assess whether inflation is slowing sufficiently without risking a severe downturn, though the central bank has said it does not want to stay on hold longer than needed.

Because recent inflation figures have come in below the central bank’s expectations, “it appears that much of the growth we are seeing is coming from an easing of supply constraints rather than necessarily a pick-up in underlying demand,” wrote Grantham.

“As a result, we still see scope for a gradual reduction in interest rates starting in June.”

WATCH | Bank of Canada left interest rate unchanged earlier this month: 

Bank of Canada leaves interest rate unchanged, says it’s too soon to cut

22 days ago

Duration 1:56

The Bank of Canada held its key interest rate at 5 per cent on Wednesday, with governor Tiff Macklem saying it was too soon for cuts. CBC News speaks with an economist and a couple who might be forced to sell their home if interest rates don’t come down.

The central bank has maintained its key policy rate at a 22-year high of five per cent since July, but BoC governors in March agreed that conditions for rate cuts should materialize this year if the economy evolves in line with its projections.

The bank in January forecast a growth rate of 0.5 per cent in the first quarter, and Thursday’s data keeps the economy on a path of small growth in the first three months of 2024. The BoC will release new projections along with its rate announcement on April 10.

Growth in 18 out of 20 sectors

Growth in January was broad-based, with 18 of 20 sectors increasing in the month, StatsCan said. The agency said that real estate and the rental and leasing sectors grew for the third consecutive month, as activity at the offices of real estate agents and brokers drove the gain in January.

Overall, services-producing industries grew 0.7 per cent, while the goods-producing sector expanded 0.2 per cent.

In a preliminary estimate for February, StatsCan said GDP was likely up 0.4 per cent, helped by mining, quarrying, oil and gas extraction, manufacturing and the finance and insurance industries.

Adblock test (Why?)

728x90x4

Source link

Continue Reading

Economy

Yellen Sounds Alarm on China ‘Global Domination’ Industrial Push – Bloomberg

Published

 on


US Treasury Secretary Janet Yellen slammed China’s use of subsidies to give its manufacturers in key new industries a competitive advantage, at the cost of distorting the global economy, and said she plans to press China on the issue in an upcoming visit.

“There is no country in the world that subsidizes its preferred, or priority, industries as heavily as China does,” Yellen said in an interview with MSNBC Wednesday — highlighting “massive” aid to electric-car, battery and solar producers. “China’s desire is to really have global domination of these industries.”

Adblock test (Why?)

300x250x1

728x90x4

Source link

Continue Reading

Trending