‘Off the charts’ wage growth puts Bank of Canada in tough spot after jobs report
A surprisingly robust September jobs report could put the Bank of Canada in the position to raise interest rates again later this month, some economists are arguing.
Canadian employers added 64,000 jobs in September, Statistics Canada said Friday, outpacing August’s gains of 40,000 positions and keeping the unemployment rate steady at 5.5 per cent for the third consecutive month.
Canada’s rapid population growth means the country has to add an estimated 50,000 jobs per month to keep pace with the expanding population growth, StatCan says.
The agency says the September jump in employment was driven by part-time work.
The consensus of economists had called for a gain of roughly 20,000 positions in the month, but CIBC senior economist Andrew Grantham said in a note to clients on Friday that much of the growth was in the education sector, which tends to be “volatile” this time of year.
A gain of 66,000 education jobs in September more than made up a loss of 44,000 in August, StatCan said. Elsewhere, gains in the transportation and warehousing industries offset losses in financing, real estate, insurance and the construction sectors.
Average hourly wages were up 5.0 per cent in the month, rising at a slightly faster pace than the 4.9 per cent seen in August.
The Bank of Canada, which has hiked rates 10 times in the past 18 months, has stressed that it will be hard to fully curb inflation if wages maintain their current patterns of rising between four and five per cent annually.
The monthly, seasonally adjusted and annualized gain for average hourly wages on permanent employees was 8.3 per cent in September, said Derek Holt, vice president and head of capital markets economics at Scotiabank.
“Wages are just going off the
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