PrefBlog

No great joy in the Canadian jobs number:

Canadian job creation hit a stumbling block in July after two months of modest gains and following an impressive number of new jobs added earlier in the year.

A hefty 51,600 part-time positions were eliminated over the month, with women over 55 feeling the brunt of the job losses, according to Statistics Canada data released Friday. Employment for all other age groups remained roughly the same as the month before, and full-time employment increased by 21,300 jobs in July, compared with 29,300 new full-time jobs in June.

Some are calling for rate cuts; others aren’t:

“All things considered,” David Madani of Capital Economics told clients in a note, “this jobs report provides further support to our long-held view that the Bank of Canada may eventually be forced to cut interest rates.”

Mr. Madani’s analysis assumes policy makers will focus on the headline number, which suggests that Canada’s economy has slid into a soft patch, as job creation was paltry in May and June. The unemployment rate rose to 7.3 per cent in July from 7.2 per cent the previous. Canada now has lost an average of about 5,000 jobs over the past three months.
…
Policy makers keep an eye on changes in the average hourly wage rate of permanent employees to gauge whether inflation pressure is building. That number jumped 3.9 per cent in July from a year ago, to $24.49, the fastest since April, 2009.

Bigger wages will support consumer demand. But all things equal, any increase in purchases will put upward pressure on prices. “This…could be a source of concerns for the Bank of Canada if it proves persistent,” Nomura’s Charles St-Arnaud, a former Bank of Canada economist, said in his analysis of Friday’s jobs report.

It was a mildly negative day for the Canadian preferred share market, with PerpetualPremiums down 4bp, FixedResets off 1bp and DeemedRetractibles losing 6bp. Volatility was negligible. Volume was DEAD. You hear me? DEAD! I’ve seen more life in a regulator’s office!

This entry was posted on Friday, August 10th, 2012 at 8:01 pm and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.