TD Economics outlines the central bank's likely strategy
While the Bank of Canada will not rethink its rate hike freeze after just one exceptional labour market report, the institution is likely to keep an eye out to see if this trend continues, according to TD Economics.
Canada saw the addition of more than 150,000 new jobs in January, a figure that was fully 10 times higher than most experts’ predictions.
Considerable gains were seen across most sectors during that month, Statistics Canada reported. Full-time employment was up by 121,000 and part-time employment increased by 28,900.
“The fact that gains were concentrated in full-time jobs in the private sector, alongside people working more hours, makes this an even more impressive report,” TD said in a new analysis. “Although the seasonal adjustment should be called into question, the sheer size of this print points to a further boost to consumer spending and overall GDP to start the year.”
The unusual strength to start the year will definitely “raise eyebrows” at the BoC, TD said.
“Their conditional pause on further rate hikes is predicated on a slowing of economic growth and an easing in the labour market,” TD said. “The bank won’t adjust course after one report, but it will be closely watching to see if this trend of massive job gains continues.”
