Ottawa: Canada's economy added 10,000 more jobs in October than expected and the unemployment rate held steady, according to official data. The big surprise is that the market is demanding additional, disproportionate interest rate hikes.
The economy added a net 108,300 jobs last month, easily surpassing the 10,000 new jobs forecast, while the unemployment rate remained unchanged at 5.2 percent, according to data released on Friday. The entire shock benefit, which was distributed to both the goods and services sectors, included full-time employment.
These numbers suggest that Bank of Canada Governor Tiff McCalem zigzag instead of zigzagged. They are very powerful. Actually, I'm shocked," declared Derek Holt, Scotiabank's vice president of capital markets economics.
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The growth in jobs suggests another 50 basis point increase may be on the way, even though additional data will be released ahead of the next Bank of Canada (BOC) rate meeting in December, he continued.
While further increases will still be needed, the BoC last week raised its policy rate by 50 basis points to 3.75 per cent and announced that its tough campaign was almost complete.
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With a nearly 70% chance of a 50-basis-point increase and the policy rate now projected to peak at 4.5 percent early next year, the employment report strengthened money market bets on another disproportionate increase in December.
Average hourly wages for permanent employees rose year over year, from 5.2 percent in September to 5.5 percent in October. Overall, slightly more people were employed than in May 2022.
Core-age workers in Canada continued to make gains. The core-edge unemployment rate currently stands at 4.2 percent, well above the record low set in July, but still within a narrow historical range that was last seen in the 1970s.
Prime Minister Justin Trudeau's government announced billions in new spending on Thursday, among other things, to aid low-wage workers.
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The Canadian dollar was valued at 1.3525 US cents, or 1.6 percent, against the US dollar.