Monday, February 26, 2024
ADVT 
National

BoC expected to take its time with interest rate cuts after January's job gain

Darpan News Desk The Canadian Press, 09 Feb, 2024 11:02 AM
  • BoC expected to take its time with interest rate cuts after January's job gain

The Bank of Canada will be in no rush to cut interest rates after Statistics Canada reported a larger-than-expected employment gain last month, economists say.

The federal agency's labour force survey released Friday said the economy added 37,000 jobs in January after several months of relatively no change in employment.

Canada’s unemployment rate fell to 5.7 per cent last month, marking the first decline since December 2022.

"I would classify the labour market as tighter-than-expected, but not necessarily stronger-than-expected," said Andrew Grantham, CIBC's executive director of economics.

"That's because, yes, employment continued to rise a little bit faster than the consensus expected. But it really paled in comparison with the big increase in population."

Canada's population of people aged 15 and older grew 0.4 per cent between December and January, far surpassing the 0.2 per cent growth in employment.

The labour market cooled significantly in 2023 as high interest rates weighed on consumer spending and business investment, pushing the unemployment rate up from 5.1 per cent in April to 5.8 per cent in December.

Brendon Bernard, a senior economist with hiring website Indeed says the unemployment rate, however, doesn't give the full picture when it comes to the state of the labour market. That's because it only measures the proportion of unemployed people among those who are actively looking for work.

Statistics Canada's report emphasized the employment rate — which measures the proportion of the working-age population that's employed — has been declining for four consecutive months, including in January.

"I think that's probably a better barometer of the direction of the labour market," Bernard said.

Even so, the relatively decent state of the labour market suggests to economists that the central bank can take its time when it comes to cutting interest rates.

"Today's data is certainly not going to speed up the timeline for the Bank of Canada," Grantham said. 

The Canadian economy also appeared to end 2023 on a stronger note than expected.

Statistics Canada reported Wednesday the economy grew 0.2 per cent in November, marking the first expansion in six months.

A preliminary estimate suggests real gross domestic product increased 1.2 per cent on an annualized basis in the fourth quarter, following a decline of a similar magnitude in the third quarter.

Last month, the Bank of Canada opted to hold its key interest rate at five per cent and signalled that it's inching closer to rate cut considerations.

However, governor Tiff Macklem expressed concern about the stickiness of inflation and warned the central bank will be ready to raise rates if price growth doesn't co-operate.

CIBC is not changing its forecast on timing for the first rate cut as it still anticipates the central bank will lower its key rate starting in June. But it now expects the bank will cut rates by less overall this year. 

Employment rose across several sectors in January, led by wholesale and retail trade as well as finance, insurance, real estate, rental and leasing.

Meanwhile, accommodation and food services saw the largest decline in employment.

Workers’ wages continued to grow rapidly last month as Canadians seek compensation for past inflation. Average hourly wages, which have been consistently growing at a four to five per cent annual pace, rose 5.3 per cent from a year ago.

Statistics Canada says wage growth has been stronger for women and high-income earners. Although men continue to earn more than women on average, average hourly wages for women rose 6.2 per cent compared with 4.4 per cent for men.

For employees in the top 25 per cent of the wage distribution, their wages grew 5.9 per cent compared with 4.6 per cent for those in the bottom 25 per cent.

Canada’s labour market has been supported by strong population growth, driven by permanent and temporary immigration.

Compared with a year ago, the economy added 345,000 jobs, while the working-age population expanded by one million people.

As the Bank of Canada maintains its benchmark rate, economists’ forecasts suggest unemployment will rise throughout this year.

MORE National ARTICLES

Trudeau says he's furious over Bell Media layoffs, calling it a 'garbage decision'

Trudeau says he's furious over Bell Media layoffs, calling it a 'garbage decision'
Prime Minister Justin Trudeau is trash-talking BCE Inc.'s widespread layoffs, calling the cuts a "garbage decision." Trudeau says he's furious over Bell Media's decision to end multiple television newscasts and that the corporation should know better.  

Trudeau says he's furious over Bell Media layoffs, calling it a 'garbage decision'

Bear spray sold illegally: VPD

Bear spray sold illegally: VPD
An undercover operation led by Vancouver police has resulted in 20-thousand-dollars in fines against 10 different businesses that illegally sold bear spray. Vancouver bylaw restricts where bear spray can be displayed in stores, limiting sale of the product to people over age 19 and requiring stores to keep sales records. 

Bear spray sold illegally: VPD

Poilievre pledges to fix broken access-to-information system, release more faster

Poilievre pledges to fix broken access-to-information system, release more faster
Conservative Leader Pierre Poilievre is pledging to fix the federal access-to-information system to speed up response times and release more information. He made the commitment during a news conference in Vancouver on Thursday, where the Opposition leader announced a new revenue plan for First Nations alongside leaders in the region. 

Poilievre pledges to fix broken access-to-information system, release more faster

BC snowpack 40% below normal

BC snowpack 40% below normal
B.C. went on to experience deep and prolonged drought after a record-breaking heat wave in May spurred rapid melting and drying. Then came the province's devastating fire season. Thursday's bulletin says the low snowpack combined with warm seasonal forecasts and "lingering impacts" from the previous drought are creating "significantly elevated drought hazards" for 2024.

BC snowpack 40% below normal

Non-profit buys two B.C. co-ops

Non-profit buys two B.C. co-ops
Premier David Eby says the first purchase using the government's Rental Protection Fund will save 290 affordable rental units in two housing co-ops that have expired leases and were facing the prospect of being sold out from under the residents. Eby says the government's fund will contribute $71 million towards the $125 million acquisition in the Metro Vancouver city of Coquitlam by the non-profit Community Land Trust of B.C.

Non-profit buys two B.C. co-ops

Dental providers aren't smiling about reimbursement under federal plan

Dental providers aren't smiling about reimbursement under federal plan
Some dentists and hygienists fear they won't be fairly paid for services under a new federal dental plan, and they worry it will jeopardize the success of the massive program. Each province and territory has its own guide to how much dental services cost.

Dental providers aren't smiling about reimbursement under federal plan

PrevNext