The Canadian economy lost 6,400 jobs in July, according to StatCan
Canada’s latest jobs market data, which yielded weaker than expected results, indicates that the economy has begun entering a period of slower growth, according to Dawn Desjardins, chief economist at Deloitte Canada.
The Canadian economy lost 6,400 jobs in July while the unemployment rate went up to 5.5%, Statistics Canada said last week.
Desjardins said that the numbers are proof positive that the Bank of Canada’s rate hike campaign spanning March 2022 to July 2023 did its job in moderating demand. The central bank’s policy rate is currently at a multi-decade high of 5%.
“The long-awaited slowing in terms of Canada’s labour market is materializing,” Desjardins told BNN Bloomberg.
Deloitte’s projections are anticipating “extended weakness” in the Canadian economy to manifest in the latter half of this year, Desjardins said.
At the same time, “I would say overall it’s not like we’re in a sharply deteriorating labour market,” she said. “We still, I would argue, are in pretty tight labour market conditions – easing a little bit which is, you know, by design.”
Canada's #unemploymentrate rises to 5.5% in July, but noteworthy wage growth of 5% is recorded. The economy also shed 6,400 jobs, indicating the desired impact of the Bank of Canada's rate-hiking trajectory. https://t.co/7ehMtdazwJ#breakingnews #mortgageindustry #economy
— Canadian Mortgage Professional Magazine (@CMPmagazine) August 4, 2023
BoC highly likely to keep benchmark lending rate at 5%
Desjardins said that taking these figures and the likely near-future trend into account, the central bank will elect to keep its policy rate steady at 5% in its September announcement.
“I do think that this really bolsters the case for the bank to remain on the sidelines,” she said.
Beata Caranci, chief economist at TD Bank, echoed the predictions of a rate freeze.
“I think [the BoC] have sufficient reason to not hike and stay on the sidelines because that unemployment rate has risen about 50 basis-points in a fairly short period,” Caranci told BNN Bloomberg.
