RBC: Trade war hit Canadian jobs market in August | investingLive
RBC economist Claire Fan is out with a review of today’s soft Canadian jobs report. Jobs fell by 66K after a 41K decline in July in what’s clearly a worsening picture.
She notes that the weakness mirrors a softening picture in the US.
Fan highlights that unemployment at 7.1% is the highest in a decade outside of the pandemic but also notes some positive signs.
“Most of the job losses were part-time, actual hours worked edged up 0.1%, and weakness remained relatively concentrated in the trade exposed sectors of the economy– employment in manufacturing, transport and warehousing together shrank by 42k in August,” Fan wrote.
The loonie is the lagging G10 currency today, trailing even the US dollar. It trades at 1.3846.
“The negative job market report today increases the odds that the BoC could see fit to cut interest rates further,” Fan writes. Pricing currently shows a 92% chance of a cut, which she says could be solidified by a benign CPI report the day before the Sept 16 decision.
Fan adds:
Another softer inflation print could raise odds for additional easing relative to our current base case that assumes the BoC has already reached the end of the cycle.
Going forward, condition in trade exposed sectors will likely continue to worsen but we don’t expect that will spread and cause a sharp, broad-based contraction. For that, we point to 1) relatively low average tariff rate on Canada among major U.S. trade partners thanks to CUSMA exemptions and 2) healthy domestic consumer spending trends as reasons why we expect resilience in other sectors will help keep a floor under broader economic conditions.
Canadian employment report