The recent pandemic has been very hard on the global economy. In addition, the conversations about a lurking recession are spreading havoc among investors. Big IT companies are cutting off their workforce. Facebook and Google are the latest examples in this row. Despite the concerning circumstances, Canada is one major global economy with a steady 5% unemployment rate. Employment in Canada has risen at an unanticipated rate. Canada has added 150K jobs in January alone.
In the last month of 2022, financial experts forecasted an estimated addition of about 5000 jobs. But an unexpected addition of almost 70K jobs by the private sector of Canada has spooked almost all the financial experts. The demand for workers is increasing day by day. Trudeau’s government has opened Canada to immigrants, skilled temporary labor, and students from abroad.
In feedback to the investors, Chief Economist Doug Porter said that the rising employment number is sending no signals of recession shortly. It is worth noticing that since September 2022, the Canadian economy has added almost 350 thousand jobs. This number has pushed the employed Canadians to approximately 20 million.
Friday’s tally of bond yield and loonie against the US dollar has suggested that the Canadian job market is running well, but this growth may be unstable. Looking at the stats from last December and an unanticipated addition of jobs in recent months prompted the Canadian central bank to hike the interest for the last before it decided to pause to assess the market situation.
Governor Tiff Macklem suggests that the increased interest rate will bring economic growth close to zero in the initial three quarters of the current financial year. Governor Tiff has raised the lending rates by 425 basis points in less than one financial year. The interest rate now banks at 4.5%. After the last meeting among the policymakers, the central bank of Canada has conferred that it is putting a hold on interest rates but might hike it later if the job market still paces hot.
Another financial expert, Royce Mendes, said in a report that the central bank of Canada is looking for further evidence that the Canadian market economy will not follow the forecasted path. Market Indicators till now have suggested that the Canadian economy is following anything but the forecasted slowdown.
Adding more jobs to the market has forced traders to anticipate no rate cuts in the current financial year. If the recent trend continues, the bank of Canada will have no other option but to increase the rate by another 0.25%.
Strategy makers at the Toronto-Dominion bank said they are seeing a maximum risk that the bank of Canada will hike rates in June. Strategists said that the recent data on jobs had taken away the necessity of further evidence, but the bank of Canada is looking for further evidence to increase the rates.
The labor force’s participation has increased to 65.7% because of the addition of 153 thousand new employees. The Canadian market is taking advantage of population growth at a high rate due to its immigration policies.
The Canadian economy has ranked second to the US. It has flawed all the forecasts made about the current financial year. The unemployment rate in the USA dropped to an all-time low since May 1969. Currently, the magnitude of the unemployment rate in the USA is 3.4%. Canada right now ranks second at around 5%.
The average hourly wages have also grown at a rate between 4%-5%. In January, the hourly wages increased by 4.5%, which is lower than in December last year. Governor Macklem said that if the objective is to contain the inflation to a 2% rate, then the rate of wage growth between 4%-5% is insufficient unless the productivity grows at stronger rates.
The addition of a bold number of employees in the Canadian economy has pushed employment in Canada to 62.5%, which levels the numbers to May 2019 before the pandemic. The added workforce last contains both gender groups in their prime employment years. The addition has been observed in both private-sector undertakings and government institutions. The total working hours also rose by 0.8% in the last month. This number is the highest since May last year.
The addition of employment has been observed in the five major provinces of Canada. These five provinces include Quebec and Alberta. The maximum increment in the workforce was observed in the businesses related to wholesale and trade.
