The Canadian jobs market has essentially returned to its pre-pandemic strength, observer says
Robust jobs market recovery in December might sufficiently motivate the Bank of Canada to implement rate hikes sooner, according to Kevin Carmichael of the Financial Post.
A total of 54,700 new jobs were added to the national economy in December, more than double experts’ expectations of 25,000 for that month, Statistics Canada data showed.
Full-time employment increased by 123,000 due to many part-time workers moving to more permanent positions. The jobless rate also dropped to a near-historic low of 5.9%, StatCan said.
With these indicators returning to essentially pre-pandemic levels, the central bank might move up its rate-hike timetable, “perhaps even at the end of January when policy-makers next gather to update their assessment of the economy and recalibrate policy,” Carmichael said.
“The latest wave of COVID-19 infections will give them pause. But whereas the Great Recession was followed by a long period of disappointing economic growth, the recovery from the pandemic-driven recession has stoked worrying levels of inflation around the world,” Carmichael said.
Still, the threat posed by the Omicron variant could be a speed bump in the central bank’s rate hike plans.
“Statistics Canada’s latest Labour Force Survey was completed before Quebec, Ontario and other provinces initiated new health restrictions to slow the spread of the Omicron variant,” Carmichael said. “Anecdotal evidence of a COVID-19-induced soft patch could prompt the Bank of Canada to leave interest rates unchanged at its Jan. 26 policy announcement.”
This would leave March 2 and April 13 as the next possible dates for the start of the 2022 hikes, Carmichael said.