By Ketki Saxena
Investing.com -- Earlier today, Statistica Canada reported that the Canadian labour market declined by 6.4k positions in July, as full time employment rose by 1.7k, while part-time employment fell by 8.1k jobs.
The unemployment rate rose 0.1 percentage points to 5.5% while the participation rate dropped 0.1 percentage point to 65.6%.
Meanwhile, wages were up 5.0% year-on-year vs 4.2% in June.
The data reveals a cooling labour market as the Bank of Canada's rate hikes begin to make their effects felt, with economists noting that today's data boosts the case for the Bank of Canada to remain on the sidelines and hold interest rates steady at 5%.
However, economists at Canadian financial institutions note that while today's data raises the bets of a rate hold, the Bank of Canada will closely monitor further incoming economic data, and remain willing to hike rates further if needed.
CIBC (TSX:CM) meanwhile, has reiterated it's calls for one more rate hike from the Canadian central bank before year's end.
Here's a roundup of commentary from economists at Canada's key financial institutions.
Carrie Freestone, Economist, RBC (TSX:RY)
"Job growth was largely flat in July, but controlling for a boost to the Canadian population, labour markets softened more significantly under the surface. The jobs report is one of a slew of indicators in advance of the BoC ’s next interest rate decision on September 6th and the question remains whether interest rates are sufficiently restrictive to tame inflation."
"Today’s jobs report is a point in favour of keeping the overnight rate at 5%, but the BoC will closely monitor additional indicators – particularly upcoming inflation and consumer spending reports – to determine whether an additional hike is needed."
Douglas Porter, Chief Economis, BMO (TSX:BMO)
"There is mounting evidence that the extreme tightness of the Canadian job market is easing and, if inflation cooperates, suggests that the case for the Bank of Canada moving to the sidelines is now very strong. That said, firm and persistent wage growth, which is working with a lag, suggests the Bank will still lean on the economy with these high rates for a prolonged period." |
James Orlando, CFA, Director & Senior Economist, TD (TSX:TD)
"The Bank of Canada isn't likely to change its hawkish tone just yet. While odds of another rate hike dropped following this report, the BoC will need to see more of the same before it can feel like its job is done. Today's report is in line with our expectation for a rising unemployment rate and a further slowing in economic momentum through the rest of this year. "
Marc Desormeaux, Principal Economist, Desjardins
"Altogether, we think the weakening jobs print means that the Bank will keep rate hikes on hold at its September meeting. Economic activity appears to be moderating amid sharply higher borrowing costs, and we maintain that the full effects of prior increases have yet to be felt by Canadian consumers and businesses."
"With officials expressing the desire to avoid overtightening, we believe that the bar for further hikes is high in light of the recent signs of weakening in growth, employment, and inflation."
Andrew Grantham, Senior Economist, CIBC
"The reacceleration in wages and still low unemployment rate mean that today's data are unlikely to convince the Bank of Canada that the labour market has loosened enough yet to sustainably achieve its 2% CPI target, despite the weaker headline jobs count.”
“Because of that we are, for now, retaining our forecast for one more interest rate hike, although some good news on the inflation front in two weeks time could be enough to prevent that.”