With the Bank of Canada paused, eyes turn to the job market

(OTTAWA) As the Bank of Canada pauses interest rate hikes to gauge the impact of higher borrowing costs on the economy, economists will pay close attention to how the stock market work will react.


The central bank on Wednesday raised its benchmark rate for the eighth straight time and announced it was taking a conditional pause, leaving the door open for further rate hikes if inflation is not brought under control.

The Bank of Canada intends to slow the economy by keeping interest rates high for some time. One of the consequences of this slowdown will likely be an easing of the labor market.

However, so far, the Canadian labor market has maintained its momentum.

” I think that [le taux de chômage] surprised by being both below market expectations and Bank of Canada expectations,” observed Bank of Montreal economist Shelley Kaushik.

In December, the unemployment rate stood at 5.0%, just above the historic low of 4.9% reached this summer.

In its latest monetary policy report, the Bank of Canada reiterated that it expected the full effect of rate hikes on the labor market to manifest itself over a longer period.

As businesses and consumers cut spending, economists predict rising unemployment – ​​but the extent of that rise remains to be seen.

Labor groups have expressed concerns about the Bank of Canada’s rate hikes in recent months. Unifor President Lana Payne notably accused the central bank of wanting to wage war on the working class.

But some economists are cautiously optimistic that employment could prove quite resilient to the downturn, given that unemployment is currently near historic lows.

“We hope that as companies start to see this slowdown in demand, they will start by cutting vacancies before laying off workers,” said Ms.me Kaushik.

The number of job vacancies reached record highs last year, with more than one million unfilled jobs in the economy.

Since then, the number of vacancies has fallen to around 850,000 in November.

Statistics Canada said Thursday that the number of job vacancies fell 2.4% in November, to its lowest level since August 2021.


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