Canadians Are Experience Record Low Unemployment Rates Across The Nation

November was a dynamite month for job creation, with a record 94,000 jobs created, pushing the unemployment rate lower to 5.6%.

two people working at computer
This is the lowest level of unemployment since records began in the mid 70s. Just under 90 thousands of the jobs are full time, and more than 78 thousand were created in the private sector – both are positive elements of the job growth. The strongest job gains were in Quebec and Alberta, with 14,000 new construction jobs created, 27,000 in ‘goods production’, and the rest in services, especially in professional, scientific, and technical services. 
November 2018 Canadian Unemployment Rate
While experts hailed the news as a big and very positive surprise, they also highlighted the fact that wage increases are beginning to lose momentum and to decline. The strength of the economy is boosting pressure on inflation, with the rate jumping to 2.4%. In its latest announcement, the Bank of Economy decided not to increase rates, but will likely adjust its approach in the new year if economic temperatures remain hot. While the economy is strong, rising interest rates and government intervention remain as anchors on the still generally healthy real estate market. 
These two factors have resulted in real estate dynamism in Canada’s biggest city lessening to the extent that the City of Toronto is worried it will lose up to $100 million in revenue from the land transfer tax. In recent years, the city government has become extremely dependent on the transfer tax to finance spending. Tembo will keep a close eye on economic indicators in the new year to see if these record trends continue. 
 

Interest Rate Increase Is Imminent

Interest Rate Increase Is Imminent

higher interest rate sign

Prepare for another increase in interest rates on Jan. 17th, the date of the Bank of Canada’s next monetary policy announcement (decision on rates). It is Tembo’s prediction that the possibility of another hike from 1% to 1.25% is extremely high. While it is possible that the Bank will hold off on a hike until later, given the recent release of some important economic statistics, the likelihood of a hike is sky-high. Economists, bankers, and the media are all anticipating a hike.

interest rate increase

Low unemployment is the likely precursor to a hike

  In December of 2017, the Canadian economy added 79,000 jobs, lowering the country’s unemployment rate to 5.7%, the lowest in over 40 years. Every region of the country added jobs, with most of the growth in Quebec and Alberta. Most of the jobs were full time and private sector, another sound aspect of the increase. More jobs will increase spending and will further add pressure to inflation, which is creeping up, albeit very slowly. The consensus among experts was that the Bank of Canada would wait for the latest employment statistics before making its decision and essentially every economist was amazed at the sheer number of jobs created. The Canadian dollar surged to almost 81 cents on the strong news.

CDN Dollar rate

Job market is booming

The sectors that are seeing the most job creation are services and manufacturing, public sector job growth which was strong in 2017 is beginning to decrease. Across the country, job numbers are growing and there is a growing diversification away from construction and energy related jobs which is a positive sign. January jobs numbers will be interesting as they will reveal if so much of the reduction of unemployment was seasonal due to the holiday season. Either way, higher interest rates will make it more expensive for Canadians to acquire mortgage debt, especially first-time buyers.

unemployment rate