The impressive job gains in Canada and the U.S., although raising hope both economies may have enough juice to escape a much forecasted recession, is creating pressure to continue raising rates to combat inflation. PHOTO courtesy Flow.
Employment surged on both sides of the border in September, surprising economic pundits while raising concerns among manufacturers of continuing upward pressure on wages and the possibility of further interest rates hikes to curb inflation concerns.
Employment in Canada rose by 64,000 jobs last month, which far exceeded the estimate from Bay Street economists of 20,000. The unemployment rate held steady at 5.5% for the third consecutive month despite the country’s population growing at a historic pace. Canada’s adult population increased by more than 82,000 people in September. The vast majority — 72,000 are considered to be in the labour force — meaning they are of working age, and actively looking for employment, a welcome sign for manufacturers facing an acute talent shortage.
Meanwhile south of the border, the U.S. employers remained unfazed by higher interest rates and the threat of a government shutdown in the midst of political gridlock in Washington to add 336,000 jobs in September. That exceeded the 227,000 jobs added in August and raised the average gain in jobs for the past three months to 266,000. The unemployment rate in the U.S. stands at just 3.8%, which is very close to a half-century low.
The impressive job gains, although raising hope both economies may have enough juice to escape a much forecasted recession, is creating pressure to continue raising rates to combat inflation.
The next interest rate announcement from the Bank of Canada is expected on Oct. 25, with the central bank weighing whether the recent data – including an uptick in inflation – should mean raising interest rates yet again after it had recently decided not to.
Ontario was one of the provinces which showed the strongest growth, adding 19,900 jobs.
“Ontario is Canada’s economic engine, and today’s employment figures reinforce that, with close to 250,000 jobs created in the province in just the past 12 months,” said Vic Fedeli, minister of economic development. In the last three years, Ontario has also added close to 40,000 new manufacturing jobs.