Economists from the Royal Bank of Canada (TSX:RY) (RBC) and the Canadian Imperial Bank of Commerce ( CIBC (TSX:CM)) have predicted a marginal increase in Canada's unemployment rate for Thursday, October 5, 2023. The unemployment rate is anticipated to rise to 5.6% from 5.5%, a development that could influence the Bank of Canada's decision on interest rates.
Job growth predictions vary between the two financial institutions. RBC has projected an addition of 25,000 jobs, while CIBC has offered a more conservative estimate of 20,000 new jobs. These forecasts are set against a backdrop of an economic climate characterized by four consecutive quarters of per-person GDP contraction.
The economists also highlighted concerns regarding the potential negative impact of mortgage renewals on future consumer spending. This indicates that household debt and its management could play a significant role in shaping Canada's economic trajectory in the coming months.
The job report comes at a crucial time as policymakers at the Bank of Canada weigh their options on whether to adjust interest rates, a decision which could be swayed by these unemployment and job growth predictions.
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