Canada: Despite weak jobs numbers, another BoC rate hike still likely – CIBC

The Canadian employment report released on Friday showed weaker-than-expected figures, with an unexpected drop in net employment. CIBC analysts They note that the weak headline numbers may cause the Bank of Canada to question its apparent commitment to hike interest rates further, but note that the numbers could pick up in coming months due to employment in education.

Featured Statements:

“The summer lull continued in the Canadian labor market, with a 40,000 job drop marking the third consecutive monthly decline. However, unlike the previous two months, the latest drop cannot easily be seen as a consequence of the reduction In fact, the participation rate increased in August, which means that the decrease in employment raised the unemployment rate to 5.4%, from 4.9% in the previous month.However, since the decrease in the As employment is partly due to a big drop in education, which tends to experience volatility in the summer months, we doubt today’s weak headline numbers will change the Bank of Canada’s commitment to continue raising interest rates.”

“The decline in jobs during the month of August was focused on full-time jobs (-77,000) and in the public sector (-28,000). By sector, the drop of 28,000 jobs in construction (a previously booming sector) shows that rising interest rates are having an impact on the labor market.However, the decline of almost 50,000 jobs in the education sector is more likely to represent difficulties in the seasonal adjustments within this sector, and as a result we should see a rebound in the coming months.”

“The weak headline figures may cause the Bank of Canada to question its apparent commitment to hike interest rates further. However, with the big drop in employment in the education sector that could be reversed in the future, and with one more survey of the workforce before the Bank’s October meeting, it still seems likely that there will be at least one more rate hike before a pause is seen.”