‘All around miss’ with job numbers in November
OTTAWA The Canadian job market lost a surprise 71,200 net positions in November while the unemployment rate rose to 5.9 per cent, the highest in more than a year, data showed on Friday, as analysts said a repeat of the weak numbers could force the Bank of Canada to rethink its monetary policy.
Analysts in a Reuters poll had forecast a gain of 10,000 jobs and had predicted the unemployment rate would hold steady at 5.5 per cent. Wages for permanent employees jumped by 4.4 per cent, matching the gain seen in October, Statistics Canada said.
“All around miss,” said Derek Holt, vice-president of Capital Markets Economics at Scotiabank. He noted November’s numbers followed a weak report in October, when the labour market unexpectedly shed jobs despite a likely boost from hiring related to the federal election. “At the margin it is convincing evidence that we may be at a weakening spot in the labour market.”
The Canadian dollar fell to 1.3244 to the U.S. dollar, or US75.51 cents, after the report.
November’s unemployment rate was the highest seen since the six per cent reported in August 2018. Statcan said 38,400 full-time jobs and 32,800 parttime jobs were lost in November. Canada’s goods-producing industries saw a decline of 26,600 net jobs, largely on manufacturing. The services sector lost 44,400 net jobs.
The Bank of Canada on Wednesday held its overnight interest rate steady, which it has done since October 2018 even as several of its counterparts have eased. Future moves, it said, would depend on its assessment of the damage done by trade conflicts against sources of economic resiliency. On Thursday, Bank of Canada Deputy Governor Timothy Lane said Canada’s strong labour market has been underpinning the economy, and data was suggesting the jobs market was tightening.
A repeat of November’s weak jobs report could force the central bank to reconsider, analysts said on Friday. RBC senior economist Nathan Janzen said “if we saw a repeat of this labour market performance going forward, I think (the Bank of Canada) would start rethinking their strategy.”
Chances of a BOC interest rate cut by July rose to 50 per cent from about 40 per cent before the jobs data, the overnight index swaps market indicated.