Further Uptick in Unemployment Supports
View that Interest Rate Hiking Cycle is Finished
Labour market continues to soften as interest rates are absorbed. Canada’s economy added 17,500 jobs in October, below the consensus estimate of 22,500. At the same time, the unemployment rate inched up to 5.7 per cent — from 5.5 per cent in September — as labour force growth outpaced job gains amid historic immigration. Canada’s jobless rate has now increased four times in the past six months, reaching the highest level since the 6.5 per cent reading in January 2022. This indicates that the Bank of Canada’s 475-basis-point increase in its overnight rate over the past two years is impacting the broader economy. The hours worked held essentially unchanged in October, suggesting that labour demand is gradually easing. Coupled with an ongoing increase in labour supply, Canada’s Central Bank should feel confident that wage growth will continue to ease, and that the current monetary policy level is restrictive enough to bring down inflation.