Canadian employment levels unexpectedly fell for a third straight month in August and the jobless rate jumped, a potential signal interest-rate hikes have started to cool the tight labour market.
The economy shed 39,700 jobs last month, Statistics Canada reported on Friday in Ottawa, a surprise negative reading compared to the 15,000 gain anticipated by economists in a Bloomberg survey.
The decrease in employment and higher jobless rate may be evidence the country’s labour force is re-balancing as the Bank of Canada’s aggressive rate hikes start to cool economic growth and slow demand. The additional job searchers may likewise ease wage growth as the labour supply expands. “The weak headline figures may have the Bank of Canada questioning its apparent commitment to even higher interest rates,” Andrew Grantham, an economist at Canadian Imperial Bank of Commerce, said in a report to investors. But “with one more labour force survey before the bank’s October meeting, it still seems likely that at least one more rate hike will be in store before a pause is seen.”
The average hourly wage rate was up 5.4 per cent from a year ago, compared with 5.2 per cent in both June and July. That’s the fastest increase in records dating to 1997, outside of the pandemic.Labour force participation rates rose 0.1 percentage points to 64.8 per cent, while the number of Canadians in the labour force grew by 66,000 in August.
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