45,300 new jobs point to rate hike next week

The Hamilton Spectator - - BUSINESS - ANDY BLATCHFORD

OT­TAWA — The coun­try’s labour mar­ket beat ex­pec­ta­tions yet again last month to help wash away some of the lin­ger­ing doubts the Bank of Canada will raise its bench­mark in­ter­est rate next week.

The lat­est in­stal­ment of en­cour­ag­ing job num­bers came amid wide­spread spec­u­la­tion that the Bank of Canada will start hik­ing its rate from 0.5 per cent next Wed­nes­day.

The vast ma­jor­ity of the 45,300 jobs added in June were in part­time work, al­though the num­ber of full-time po­si­tions also rose, Sta­tis­tics Canada said Fri­day.

The fresh data, which added to a se­ries of pos­i­tive job gains over the last year, nudged the na­tional un­em­ploy­ment rate down to 6.5 per cent from 6.6 per cent the pre­vi­ous month.

Hamil­ton’s un­em­ploy­ment rate re­mained un­changed from May at 5.2 per cent.

Cen­tral bank gov­er­nor Stephen Poloz has been send­ing sig­nals in re­cent weeks and has made in­creas­ingly pos­i­tive state­ments about the state of the econ­omy.

Be­fore the jobs re­port Fri­day, many an­a­lysts were al­ready pre­dict­ing the bank to raise its key in­ter­est rate tar­get next week for the first time in seven years.

For at least one hold­out, the jobs fig­ures were a turn­ing point.

“We had held on to our Oc­to­ber fore­cast for a Bank of Canada rate hike, but con­cede that’s likely to end up off the mark, as to­day’s jobs num­bers cement the case for the cen­tral bankers to raise rates in the com­ing week,” CIBC chief econ­o­mist Avery Shen­feld wrote in a note to clients.

“In sum, the jobs mar­ket is tight­en­ing, and not that far from what his­tor­i­cally has been judged as full em­ploy­ment. “Over to you, gov­er­nor Poloz.” Des­jardins se­nior econ­o­mist Jimmy Jean said the June em­ploy­ment gain marked the sev­enth-straight monthly in­crease — and the tenth in 11 months.

Jean pre­dicts the bank to lift the rate at its sched­uled an­nounce­ment next week and hike it again in Oc­to­ber.

Last month, Poloz said those 2015 rate cuts had done their job of help­ing the broader Cana­dian econ­omy coun­ter­act the ef­fects of the oil­price slump, which be­gan in late 2014.

At this point, Jean said it would be a “shocker” if Poloz didn’t raise the rate. He added that the bank’s role is to re­main fairly pre­dictable.

“If that prin­ci­ple of pre­dictabil­ity and sound com­mu­ni­ca­tion, if that gets vi­o­lated, then it just plants the seed for the mar­ket not buy­ing into fu­ture com­mu­ni­ca­tions,” he said.

“It would be, cer­tainly, a pretty un­healthy precedent, So, I don’t think Mr. Poloz will want to play that game.”

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