Andrew Grantham: Latest News

Canada’s unemployment rate stayed a historic low of 4.9 per cent in July, remaining unchanged from June as the country continues to face a labour shortage.

Reining in government spending could take some of the pressure off the Bank of Canada in tamping down inflation and help limit pain for debt-ridden Canadians, according to a new report from CIBC.

unemployment rate rose to 5.2 per cent in May, Statistics Canada said Friday, a sign of weakening in the country’s tight labour market that will help inform the Bank of Canada’s future interest rate decisions.Employment overall was little changed in the month, the agency said, with a modest 17,000 jobs lost. Employment fell among youth aged 15-24 and rose among those aged 25-54.While part-time employment rose to the tune of 15,500 jobs in May, Canadian employers collectively cut 32,700 full-time positions, according to the report.The unemployment rate rose for the first time since August 2022, StatCan said, up from 5.0 per cent in April.The job report this morning comes after the Bank of Canada’s decision this week to raise its key interest rate target by a quarter of a percentage point to 4.75 per cent.In raising its key rate, the central bank said the labour market remains tight, reflecting continued strong demand for workers.“Some cracks appeared within the Canadian labour market in May, but these may not yet be wide enough to convince the Bank of Canada that inflation is about to meaningfully cool off,” said CIBC senior economist Andrew Grantham in a note to clients Friday morning.He suggested the weaker jobs figures might see markets scale back expectations of additional rate hikes to come, but the Bank of Canada’s policymakers may need to see “further softening” to convince them they can leave rate unchanged.Average hourly wages were up 5.1 per cent in May, continuing to outpace inflation.

The national economy continued to grow overall in the first quarter of 2023 as consumers spent more in the face of recession fears, according to Statistics Canada.

Bloomberg survey of economists called for a 8.4% gain in May.Stock-index futures extended gains and 10-year Treasury yields rose after the report. All categories increased in May, including a 44.1% surge in sales of motor vehicles and a 29.1% jump in restaurant receipts.