Statistics Canada releases latest employment sector figures
The Canadian unemployment rate remained almost static at 5.1% in November, amid the central bank’s sustained rate-hike strategy that aims to cool down elevated inflation figures.
The unemployment rate was essentially unchanged from the 5.2% reading in October, as the economy saw only 10,000 new jobs last month, Statistics Canada reported. For perspective, the pre-pandemic level was 5.9% in November 2019.
Shifting conditions towards labour market tightness mean that the Bank of Canada will have to be particularly careful in its rate hikes to properly manage inflation risks, according to Citi economist Veronica Clark.
“I think [the BoC needs] to ultimately be a bit more vigilant still than even the market is expecting,” Clark told BNN Bloomberg.
Clark is among those anticipating a 50-basis-point hike in the central bank’s next policy announcement on Dec. 7.
“It’s kind of telling you that maybe underlying wage and price pressures are right around 5%, in which case interest rates need to get closer to that level also,” Clark said.
Read more: Labour market struggles weighing on purchasing power, says RBC
In a recent speech, BoC senior deputy governor Carolyn Rogers said that the central bank is walking a policy tightrope between short-term improvements in housing affordability and long-term fiscal stability.
“We need to lower house prices to restore balance to Canada’s housing market and make homeownership more affordable for more Canadians,” Rogers said. “But lower house prices may add stress for those people who purchased recently. They will have reduced equity, and this may limit their options to refinance.”
But by and large, Canadians will likely weather this storm, especially considering robust labour market figures.
“We are not expecting a severe economic downturn with the kind of large job losses typical of past recessions,” Rogers said. “We don’t want this transition to be more difficult than it has to be. But higher interest rates in the short term will bring inflation down in the long term. Canadians are looking for ways to protect themselves from rising prices, and we are working to protect them from entrenched inflation.”
