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Canadian employment growth: A pleasant surprise - RBC

Josh Nye, Senior Economist at RBC points out that the Canadian jobs report is a positive data to consider at next week’s Bank of Canada meeting. They don’t expect a move in rates until Q2. 

Key Quotes: 

“We expected a modest pullback in employment growth in December following a whopping 94k gain in November, so today’s reported 9k increase was a pleasant surprise. And the unemployment rate, which had fallen by 0.4 percentage points in the prior three months, managed to hold steady at a 44-year low.”

“Q4 proved to be the best month for job growth and also saw the largest decline in the unemployment rate. We think that will contrast with a soft quarter for GDP growth—our current tracking is for annualized growth of slightly more than 1% to close out the year.”

“The latest jobs reports, along with the Q4 Business Outlook Survey, give the BoC some positive data points to consider at next week’s policy meeting. Nonetheless, we think recent tightening in financial conditions, growing global growth concerns, and lower oil prices will lend the MPR a dovish tone overall.”

“We continue to think interest rates will move higher this year—low unemployment points to an economy at its capacity limits—but don’t expect a move until Q2.”

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