Canada adds unexpected 40,000 jobs in August — but 50,000 needed to maintain pace

financialpost.com:

Employers hired more workers than expected in August, but the unemployment rate held steady due to a population increase of 103,000, so the surprise gain likely won’t bring policymakers off the sidelines when it comes to interest rates, economists say.

The labour market added 40,000 positions last month and the jobless rate remained at 5.5 per cent, according to Statistics Canada data released on Sept. 8. Economists surveyed by Bloomberg expected a gain of 20,000 new jobs and the unemployment rate to edge up to 5.6 per cent.

Overall wages slightly pulled back, growing 4.9 per cent from a year ago compared to five per cent in July. Wages grew 5.2 per cent for permanent employees, but either measure is inconsistent with the central bank’s target of two-per-cent inflation, Desjardins economist Royce Mendes said.

“This report alone won’t make the Bank of Canada regret holding rates steady earlier this week,” he said in a note. “However, it does highlight that the economy hasn’t completely stalled.”

Policymakers cited a slowdown in economic growth in keeping the interest rate at five per cent when they met earlier this week. The Bank of Canada resumed hiking rates in June as economic indicators, such as consumer spending and inflation, proved more resilient than desired.

Economists forecast the central bank is done with raising interest rates, but it said it will leave the door open for further hikes if necessary.

A boost in Canada’s population is behind the flat unemployment rate figure, though it has increased 0.5 percentage points from April to July. The population grew by more than 100,000 in August, causing the employment rate — the proportion of the population aged 15 years and older who are employed — to fall by one