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James Knightley, chief international economist at ING, notes that the Canadian employment fell by 2,200 rather than rise by 9,900 as was expected, but the huge surprise is the apparent surge in wage growth which jumped from 2.6%YoY to 3.6%YoY.

Key Quotes

“Employment growth can be very choppy, as can be seen in economists’ forecasts for today’s jobs number which ranged from -45,000 all the way up to +35,000.”

“In any case, 2Q19 business surveys have improved after softness in 4Q18 and 1Q19, while the pick-up in oil prices is good news for the energy sector and related industries. We expect to see employment rise again next month.”

“The wage story is a bit more difficult to explain. Unemployment picked up to 5.5% but remains only fractionally above the all-time (series goes back to 1976) low of 5.4%.”

“With inflation having surprised on the upside on all the key measures last month, sharply higher wage growth should easily convince the Bank of Canada to leave the overnight rate left unchanged at 1.75% next week.”