Canada's unemployment rate hits 8-year high!
Canada had 1.5 million people out of work in November, pushing its jobless rate to a near eight-year high outside of the pandemic era and increasing the chances of a big interest rate cut on Dec. 11.
The jobless rate rose to a more-than-expected 6.8% in November, Statistics Canada said Friday, an increase of 1.7 percentage points from April 2023. A rate this high was last seen in January 2017, barring a few months in 2020 and 2021. Currency markets increased bets on a 50 basis point rate cut to 80% after the employment report, from 55% before. The odds of a 25 basis point rate cut shrank to just one in five.
The report, the last data release before the Bank of Canada announces its final interest rate decision for the year on Wednesday, also weighed on the Canadian dollar, which weakened 0.48% to 1.4090 per US dollar, or 70.97 cents. Two-year government bond yields fell sharply by 12.8 basis points to 3.026%.
Countries negotiating a global treaty to curb plastic pollution failed to reach an agreement on Monday. Analysts polled by Reuters had forecast a net gain of 25,000 jobs and an unemployment rate of 6.6% from 6.5% in October. The economy added 50,500 jobs in November, the data showed.
The rise in the unemployment rate was due to more people looking for work, the statistics agency said, adding that the youth unemployment rate for those aged 15 to 24 was the biggest contributor at 13.9%. However, youth unemployment tends to be the highest ever.
Canada's labor force grew by 137,800, or more than double the gain in jobs, the data showed, reflecting that the economy struggled to keep up with an increase in job demand. Adding to signs of labor market weakness, average hourly wage growth for permanent workers slowed to an annual rate of 3.9% from 4.9% in October. The closely watched wage growth rate was the slowest since the 3.9% rate in June 2023.
BC has cut its key policy rate by 125 basis points since June to 3.75% with a slow half-percentage-point cut in October as the bank grew increasingly concerned about anemic growth, even as inflation came within range. target of 2%.
Canada's economy grew at an annualized rate of just 1% in the third quarter, less than the Bank of Canada had forecast, and early indications are that fourth-quarter growth will also lag expectations.
Job additions in November were entirely in full-time jobs, which more than offset a slight decline in part-time jobs. Overall, employment in the goods sector decreased by a net 20,800 jobs, mostly in manufacturing, while the services sector gained a net 71,500 jobs, led by wholesale and retail trade.
The employment rate, or the percentage of the population that is employed, remained at 60.6% in November after falling for six straight months as employment growth kept pace with population growth, Statscan said, but failed to keep pace with growth in the labor force. .
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