Notes From the Desk: North American Jobs Data – A Ball of Confusion
Divergence remains the theme for the Canadian and US economies. The labour market remains strong south of the border but continues to soften in the great white north.
By the numbers:
Canada.
- 26.7k jobs created (22.5k expected), however, the mix is poor with a loss of 35.6k full-time positions and a gain of 62.4k part-time jobs.
- YoY wage growth 5.2% (4.8% expected).
- Unemployment rate rises 0.1% to 6.2% as expected.
US
- 272k jobs created (185k expected).
- YoY wage growth 4.1% (3.9% expected).
- Unemployment rate 4% (3.9% expected).
The implications:
The Canadian economy continues to struggle as job creation lags the growth in available workers.
That said, the Bank of Canada (BoC) should be concerned about the hotter than expected wage growth.
Today’s numbers should not materially alter the BoC’s thinking, as we still have two CPI prints before the July meeting.
The US economy shows little sign of cooling, as the pace of hiring remains strong. Although the unemployment rate rose to 4%, the upward pressure on wages is likely more of a concern for the Federal Reserve (Fed).
Today’s data provides no compelling reason for the Fed to cut rates, allowing them to sit on their hands.
Yields are rising in both markets. The US is higher by 10-15 bps, which is helping push Canada out by 5-7 bps.
