Bank of Canada governor Tiff Macklem during a news conference in Ottawa on June 4. (Credit: Adrian Wyld\/THE CANADIAN PRESS files) <\/p>\n
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The odds of a Bank of Canada<\/a> interest rate cut<\/a> are now rising based on a different measure of Canada\u2019s jobs market, CIBC says.<\/p>\n Employment contracted by 32,500 positions in June, according to Statistics Canada\u2019s survey of employment, payrolls and hours<\/a> (SEPH) for June released on Thursday morning. The odds of a Bank of Canada rate cut when policymakers meet on Sept. 17 have since risen to 50-50, Noah Buffam, an associate in fixed income, currency and commodities at CIBC Capital Markets, said in an email.<\/p>\n The survey, which is viewed as less volatile than the Labour Force Survey (LFS), helps \u201cto understand the underlying trend in the labour market as the last two LFS reports have shown significant volatility, with June strong and July weak,\u201d he said in a note before the SEPH data came out.<\/p>\n Canada\u2019s jobs numbers<\/a> have been topsy-turvy of late, rising by 83,000 positions in June before plummeting by 41,000 in July. That\u2019s made it harder for analysts and economists to get a handle on what is really going on with the workforce.<\/p>\n Buffam said the latest SEPH report revealed some weakness building up in non-tariff-affected sectors, including retail, construction, health care and social assistance.<\/p>\n \u201cThis is important as (Bank of Canada) governor (Tiff) Macklem linked further easing to economic weakness spreading to less tariff-sensitive sectors,\u201d he said.<\/p>\n In a press conference<\/a> following the Bank of Canada\u2019s last interest rate decision, when policymakers held rates at 2.75 per cent for the third consecutive time, Macklem said fellow governors had the economy as a whole in their sights, including how much \u201cspillover\u201d there is from the most-affected sectors onto the rest of the economy.<\/p>\n \u201cIf those spillovers are bigger and there is more downward pressure on inflation and the upward pressure from tariffs<\/a> and trade disruption is contained, there may be a need to cut interest rates further,\u201d he said.<\/p>\n For example, the retail sector shed a bit more than 8,000 positions in June, while employment in construction declined by nearly 5,200 jobs.<\/p>\n Sectors directly affected by tariffs continued to lose jobs. Employment in manufacturing fell by around 8,300 jobs in June and is cumulatively down by 26,600 jobs since January. Transportation equipment manufacturing \u201cwas the largest contributor to the overall decline recorded since January,\u201d followed by chemical manufacturing and machinery manufacturing, Statistics Canada said in its SEPH release.<\/p>\n But Shelly Kaushik, an economist at BMO Capital Markets, doesn\u2019t think the latest labour data will hold that much sway over the Bank of Canada.<\/p>\n Story Continues <\/p>\n \u201cWhile the June Labour Force Survey was solid, the July report was quite weak \u2026 both that, and the June SEPH, highlight how difficult it is to interpret Canadian jobs data,\u201d she said in an email. \u201cStill, the big picture is one of building slack in the labour market, as highlighted by the number of unemployed people per job vacancy and the rising jobless rate.\u201d<\/p>\n There were 3.2 unemployed people per job vacancy in June, according to Statistics Canada, down from 3.3 in May, but up year over year as the number of jobless rose in tandem with a decline in the job openings. The unemployment rate<\/a> stands at 6.9 per cent, up from 6.6 per cent at the start of year and well off the low of 4.8 per cent in 2022.<\/p>\n Kaushik said she\u2019ll be watching Friday\u2019s second-quarter gross domestic product<\/a> release as well as August\u2019s consumer price index<\/a> and Labour Force Survey data to provide clues about what the Bank of Canada will do.<\/p>\n \u201cThat will give us more up-to-date numbers that could help inform the (Bank of Canada\u2019s) thinking,\u201d she said.<\/p>\n \u00a0Sign up here<\/a> to get Posthaste delivered straight to your inbox.<\/p>\n \u00a0<\/p>\n Canada\u2019s current account deficit<\/a> reached the widest on record in the second quarter as the country\u2019s exports to the U.S. dropped because of the trade dispute.<\/p>\n The shortfall rose to $21.16 billion in the second quarter, Statistics Canada reported Thursday.<\/a> That\u2019s the largest since at least the early 1980s, and significantly deeper than the $1.32 billion deficit recorded in the first three months of this year, when Canadian exporters benefited from U.S. companies building inventories to get ahead of tariffs. \u2014 Bloomberg<\/p>\n Read the full story here.<\/a><\/p>\n Today\u2019s Data: Statistics Canada releases second-quarter GDP. U.S. releases data on personal spending and income, personal consumption expenditure index, advanced goods trade balance and wholesale and retail inventories.<\/p>\n Earnings: BRP Inc., Laurentian Bank of Canada<\/p>\n \u00a0<\/p>\n Marriage is a social and economic union. When a marriage ends, the financial consequences can be just as far-reaching as the emotional ones. People who are considering or concerned about a split may not know what this means for them long-term. From spousal support to TFSAs and splitting the family home, ending a marriage has financial twists most couples don\u2019t see coming. Jason Heath explains<\/a>.<\/p>\n Are you worried about having enough for retirement? Do you need to adjust your portfolio? Are you starting out or making a change and wondering how to build wealth? Are you trying to make ends meet? Drop us a line at wealth@postmedia.com<\/a> with your contact info and the gist of your problem and we\u2019ll find some experts to help you out while writing a Family Finance story about it (we\u2019ll keep your name out of it, of course).<\/p>\n Want to learn more about mortgages? Mortgage strategist Robert McLister\u2019s Financial Post column <\/a>can help navigate the complex sector, from the latest trends to financing opportunities you won\u2019t want to miss. Plus, check out his mortgage rate page<\/a> for Canada\u2019s lowest national mortgage rates, updated daily.<\/p>\n Visit the Financial Post\u2019s YouTube channel<\/a> for interviews with Canada\u2019s leading experts in business, economics, housing, the energy sector and more.<\/p>\n Today\u2019s Posthaste was written by Gigi Suhanic<\/a> with additional reporting from Financial Post staff, Canadian Press and Bloomberg.<\/p>\n Have a story idea, pitch, embargoed report or a suggestion for this newsletter? Email us at posthaste@postmedia.com<\/a>.<\/p>\n Bookmark our website and support our journalism: Don\u2019t miss the business news you need to know \u2014 add\u00a0financialpost.com<\/a>\u00a0to your bookmarks and sign up for our newsletters here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Bank of Canada governor Tiff Macklem during a news conference in Ottawa on June 4. 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