TIFF DOING HIS SNL CHURCH LADY IMITATION
Investing.com -- In a speech hosted by the Public Policy Forum at the Toronto Metropolitan University, Bank of Canada Governor Tiff Macklem stressed the need to “Rebalance the labour market”, which he called “a symptom of the general imbalance between demand and supply that is fuelling inflation and hurting all Canadians”.
Despite growing calls for a recession, the Canadian jobs market remains tight, with last month’s jobs reports blowing away all expectations by adding over 100,000 jobs after three months of losses. The unemployment rate for October meanwhile held steady at 5.2% (the record low of 4.9% was reached earlier this year in June).
Mr. Macklem also pointed to record job vacancies as evidence of overheated labor markets, as businesses struggle to find workers amidst a labour shortage. Canadian job vacancies hit a record of over one million in Q2 this year.
Mr. Macklem went on to note that despite excessive demand in the economy, the Canadian labour market is beginning to see early signs of cooling, which he sees as a sign that the Bank of Canada’s rate hike spree is working.
The Bank of Canada has raised its benchmark overnight lending rate to 3.75%, from the emergency pandemic low of 0.25% in March. Last month, the BoC surprised market expectations with a relatively tame 50 bp move.
“In recent months, we’ve seen initial signs that these exceptionally tight labour market conditions have started to ease”, the BoC governor said.
“Job vacancies have started to decline,” Macklem said. “Their softening has been evident in sectors that are more sensitive to interest rates, such as manufacturing and construction.”
He also noted that wage pressures “now look to be plateauing”.
However, Mr. Macklem foresees a further cooling in the Canadian labour market as the impact of rate hikes trickles through the economy. He also notes that a further easing in the labour market is a necessary condition to cool the overheated Canadian economy and consequently ease inflationary pressures.
“With more modest spending growth, the demand for labour by businesses will ease, vacancies will decline, and the labour market will come into better balance,” Macklem noted. “This will relieve price pressures.”
He does note however, that “This will be a difficult adjustment."
In terms of what’s next, the BoC governor said the bank will be “looking beyond headline employment numbers to gauge how different groups in the labor market adjust” to higher interest rates.
Markets are currently pricing in a one-third chance of another 50 bp rate hike from the Canadian central bank in December.
Despite growing calls for a recession, the Canadian jobs market remains tight, with last month’s jobs reports blowing away all expectations by adding over 100,000 jobs after three months of losses. The unemployment rate for October meanwhile held steady at 5.2% (the record low of 4.9% was reached earlier this year in June).
Mr. Macklem also pointed to record job vacancies as evidence of overheated labor markets, as businesses struggle to find workers amidst a labour shortage. Canadian job vacancies hit a record of over one million in Q2 this year.
Mr. Macklem went on to note that despite excessive demand in the economy, the Canadian labour market is beginning to see early signs of cooling, which he sees as a sign that the Bank of Canada’s rate hike spree is working.
The Bank of Canada has raised its benchmark overnight lending rate to 3.75%, from the emergency pandemic low of 0.25% in March. Last month, the BoC surprised market expectations with a relatively tame 50 bp move.
Related video: Canada sees unexpected job gains in October
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“In recent months, we’ve seen initial signs that these exceptionally tight labour market conditions have started to ease”, the BoC governor said.
“Job vacancies have started to decline,” Macklem said. “Their softening has been evident in sectors that are more sensitive to interest rates, such as manufacturing and construction.”
He also noted that wage pressures “now look to be plateauing”.
However, Mr. Macklem foresees a further cooling in the Canadian labour market as the impact of rate hikes trickles through the economy. He also notes that a further easing in the labour market is a necessary condition to cool the overheated Canadian economy and consequently ease inflationary pressures.
“With more modest spending growth, the demand for labour by businesses will ease, vacancies will decline, and the labour market will come into better balance,” Macklem noted. “This will relieve price pressures.”
He does note however, that “This will be a difficult adjustment."
In terms of what’s next, the BoC governor said the bank will be “looking beyond headline employment numbers to gauge how different groups in the labor market adjust” to higher interest rates.
Markets are currently pricing in a one-third chance of another 50 bp rate hike from the Canadian central bank in December.
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