CIBC Private Wealth
August 13, 2024
Money Financial literacy Economy Professionals Commentary NewsMorning Market Brief
Last Friday, Statistics Canada reported that Canada’s labour market weakened in July. This added to concerns for the labour market, which have persisted over the year. Canada’s unemployment rate has ticked higher over 2024. This has raised concerns at the Bank of Canada (BoC), which noted that its last rate cut came in part due to a struggling labour market.
- Canada’s economy lost 2,800 jobs in July, adding to the 1,400 jobs lost in the previous month. Canada’s economy has lost jobs in three of the past five months through July.
- July’s decline was driven by a fall in jobs in the retail trade industry. Conversely, jobs increased in the transportation and warehousing industry. Overall, the economy added full-time jobs over the month but was offset by a drop in part-time jobs.
- Despite net job losses in July, Canada’s unemployment rate was unchanged at 6.4% in July over June. This is Canada’s highest unemployment rate since January 2022. However, the participation rate dropped to its lowest level since 2021.
- The softening labour market is raising concerns about the health of Canada’s economy. An ongoing pullback in labour market conditions could hinder consumer strength, despite lower interest rates. A weaker Canadian consumer could stunt Canada’s economic growth.
- In its Summary of Deliberations released last week, the BoC expressed its concern about Canada’s labour markets. This concern factored into its decision to cut rates at a second straight meeting.
As inflation continues to soften and Canadian economic growth wanes, a weak labour market could push the BoC to cut rates again at an upcoming meeting. The BoC hopes looser monetary policy could help stimulate business activity, thus boosting hiring decisions. The BoC is carefully monitoring developments in the labour market as it considers its interest-rate decisions.
If you would like to discuss this economic and market update or have questions about your finances and investments, please feel free to contact me anytime.