Overall unemployment stood at 5.7% in October amid a generalized cooling in the economy
The latest labour market numbers represent a further easing of pressures on the Bank of Canada’s interest rate strategy, according to RBC Economics.
“The average level of output over July and August is slightly below its Q2 average – in line with our prior assumption that output declined for a second straight quarter in Q3, and below the BoC’s assumption that GDP rose 0.8%,” RBC said in a new analysis.
Data from Statistics Canada showed that the Canadian economy saw the addition of 18,000 jobs in October. The overall unemployment rate saw a slight increase to 5.7% last month, amid a generalized cooling in the economy.
“Details were arguably softer than the headline growth number suggested with consumer-sensitive sectors like retail sales and hospitality services looking softer (despite surging population growth) and the manufacturing sector pulling back for a third straight month,” RBC said.
Despite some improvements in the central bank's preferred "core" measures, experts remain divided on the likelihood of a hike due to factors like the softening job market. https://t.co/7hUUDulZrw#mortgageindustry #ratehike #interestrates #inflation
— Canadian Mortgage Professional Magazine (@CMPmagazine) August 17, 2023
BoC stance shows readiness to react to inflationary pressures
RBC noted that the central bank’s insistence on keeping its benchmark lending rate at 5% shows its continuing concern surrounding potential sources of pressure.
“The BoC is still concerned about broader inflation pressures running above the 2% target,” RBC said. “But evidence continues to build that go-forward inflation pressures are easing as the economic growth backdrop softens. We don't expect additional interest rate hikes from the BoC as long as that continues.”
StatCan data showed that the annualized pace of inflation ticked down to 3.7% in September.
The BoC recently noted that its 2% inflation target is “now in sight,” but the policy rate still has a lot of work to do when it comes to restoring price stability.
“We are committed to staying the course,” BoC governor Tiff Macklem said. “Overall inflationary pressures are persisting and larger-than-normal price increases remain broad-based across the goods and services Canadians buy regularly.”
