Canada is in a state of slowing economy: Economist

Canada’s unemployment rate climbed while job gains came in weaker than forecasted reading that the country’s economy is slowing, one economist says.

Canada added 17,500 jobs in October, the majority of which were part-time positions, while the unemployment rate ticked higher to 5.7 per cent from 5.5 per cent the month prior, according to data released by Statistics Canada on Friday.

“This solidifies that view that yes we are in a period where economic activity is slowing,” Dawn Desjardins, chief economist at Deloitte Canada, told BNN Bloomberg in an interview on Friday.

Desjardins explained that the slightly weaker-than-expected job gains are a reflection of the Bank of Canada’s rate hikes and are in line with a general softness in consumer and business spending.

WAGE GROWTH DIPS

Wage growth also came in below economist expectations, which called for a 5.2 per cent rise, while the data showed a moderation to 5.0 per cent from 5.3 per cent the month prior.

 

Desjardins said this de-acceleration in wage growth is a data point that the central bank has been anxious to see.

“These wages numbers are not where they want them to be, but directionally, it does suit the Bank of Canada very well in terms of indicating that the labour market — which has been robust — is finally showing real signs of showing,” she said.

THE CASE FOR RATE CUTS AHEAD

With weaker economic activity expected to continue, Desjardins believes that rate hikes have peaked in Canada.

“We have thought for a while that the bank would top out at five per cent,” she said.

In the year ahead, she said that the Bank of Canada’s two per cent inflation target might not be reached, but it will be in sight.

“That will be sufficient for the Bank of Canada really to ease off on the break a little bit,” she said.

 

 

This article was reported by BNNBloomberg