Note from the Desk – Higher Rates, Hire More!
The North American labour markets continue to confound conventional monetary theorists. Higher rates and a looming recession don’t seem to be impacting hiring (yet).
By the Numbers:
Canada:
- 111k jobs created, crushing expectations for 10k
- The unemployment rate was unchanged at 5.2%
- YoY growth in hourly wages 5.5% (5.2% expected)
US:
- 261k jobs created (240k expected)
- Unemployment rate 3.7% (3.5% expected)
- YoY growth in hourly wages 4.7% (5.0% expected)
Implications:
- The Canadian data is unlikely to cause the Bank of Canada to bring back 75 bps rate hikes. However, it does increase the probability of moving higher than the expected terminal rate of 4.25%.
- The Canadian bond market expects another 50 bps in December, and today’s job numbers put another 25 bps in January on the table. There are still a few more months of data to digest before the new year, so the odds of a 2023 hike will likely jostle around.
- The US data will keep the Federal Reserve on track to raise rates to 5-5.25%.
