Jobs re­port sets stage for rate cut

Calgary Herald - - FRONT PAGE - SHELLY HAGAN

OT­TAWA Canada’s labour mar­ket slipped af­ter two straight months of strength, send­ing the cur­rency lower and pro­vid­ing the Bank of Canada with more am­mu­ni­tion if it de­cides to cut in­ter­est rates at its next meet­ing.

The coun­try lost 1,800 jobs in Oc­to­ber, Sta­tis­tics Canada said Fri­day in Ot­tawa, ver­sus economist ex­pec­ta­tions for a 15,000 uptick in em­ploy­ment. It was the first month of job losses since July and comes on the heels of a 135,000 job gain over the prior two months. The un­em­ploy­ment rate held steady at 5.5 per cent.

While the Bank of Canada left the door open for a rate cut last week af­ter cit­ing trade ten­sions, it’s held off from eas­ing mon­e­tary pol­icy in part be­cause of the strength in the labour mar­ket that’s driv­ing house­hold con­sump­tion. That view could change if a pat­tern of a cool­ing jobs mar­ket emerges.

“The over­all trend in em­ploy­ment is still re­spectable so I don’t think it will by it­self push BOC to an im­me­di­ate cut, but the risks are clearly ris­ing,” Vas­sili Sere­bri­akov, FX strate­gist at UBS Se­cu­ri­ties LLC, said by email.

The Cana­dian dol­lar fell on the re­port, fall­ing 0.4 per cent to $1.3231 per U.S. dol­lar in af­ter­noon Toronto trad­ing. Yields on Cana­dian two-year govern­ment bonds were down four ba­sis points to 1.58 per cent.

Full-time po­si­tions fell by 16,100, while part-time in­creased 14,300. The un­em­ploy­ment rate held steady at 5.5 per cent, match­ing the me­dian fore­cast, and wage gains ac­cel­er­ated. Elec­tion-re­lated hir­ing helped off­set some of the de­clines with the pub­lic-sec­tor adding 28,700 jobs de­spite a drop in pri­vate-sec­tor and self-em­ploy­ment.

Trade fig­ures Tues­day were also dis­ap­point­ing, miss­ing fore­casts on lower ex­ports. Mar­kets have priced in a 24-per­cent chance pol­icy-mak­ers led by gov­er­nor Stephen Poloz will cut in­ter­est rates next month.

There were, how­ever, bright spots in the Oc­to­ber labour force sur­vey.

Wage gains for per­ma­nent em­ploy­ees quick­ened to 4.4 per cent on the year, a sign that tight­ness in the jobs mar­ket is boost­ing pay. Hours worked ad­vanced 1.3 per cent from a year ear­lier, match­ing last month’s pace. And even with Oc­to­ber’s de­cline, Canada has added 356,300 so far in 2019, the most in the first 10 months of a year since 2002.

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