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CRE Investment to Benefit as Drop in Employment
Sets Up Mid-Year Rate Cut
Labour market loosens further. Canada’s economy shed 2,200 jobs in March, the first drop in eight months. Combined with a large rise in the labour force, the unemployment rate jumped 30 basis points monthly and hit 6.1 per cent. Not only was this the largest increase since August 2022, but the jobless rate reached its highest level since late 2021 as elevated interest rates continued to be absorbed by the broader economy. The labour market has transitioned from a period of extreme tightness to a more balanced supply and demand dynamic. March’s jobs report was much weaker than the consensus estimate, which expected a 25,000 position gain and an unemployment rate of 5.9 per cent. With total hours worked also falling, this suggests that strong GDP growth to begin 2024 was not sustained in March, indicating economic growth could soften over the second quarter. While the Bank of Canada will take note of the acceleration in annual wage growth, March’s labour market trends support a mid-year interest rate cut.