45,300 new jobs point to rate hike next week
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.”