CIBC is out with a review of today's Canadian jobs report:
- Despite strong headline job numbers, the underlying details were mostly negative
- They cite: Largely public sector job gains, highest unemployment rate since 2016, wage growth lowest since June 2023
- The weakening labor market, combined with slow GDP growth, indicates growing economic slack
- Private sector employment grew only 1.3% over the past year, less than half the 2.8% labor force growth
CIBC writes:
The above-consensus headline gain in employment was pretty much the only positive news in today's data. The greater-than-expected increase in unemployment, weakness in hours worked and deceleration in wage growth all support our call for a 50bp cut by the Bank of Canada next week. The weakening labour market, combined with still-sluggish trend in GDP, also supports our assumption that interest rates will need to drop below a neutral level next year in order to accelerate growth and reduce the growing slack in the economy.
The Bank of Canada decision is Dec 11 and the market is now pricing in a 78% chance of a 50 bps cut, up from 52% before the data. USD/CAD is up 124 pips to 1.4146 and near a four-year low.
