Weekly Economic Report
September 8, 2014
A step backwards for Canadian employment Canadian Employment Report - August Canadian employment experienced an 11,000 decline in August after the 41,700 advance in the previous month. Full-time jobs slipped 2,400, the fourth decline in the past five months, and private sector payrolls dipped 111,800 in the month. Total hours worked fell 0.2% in August, but average hourly wages did manage to rise to a respectable 2.5% year over year pace, up from 2.1% in the prior month and the fastest pace in six months. The Canadian economy seems to be struggling to churn out meaningful job growth. Although we are aware that Canada’s job market may be in a sluggish state, Canada is still on track to see better GDP growth this year when compared to the past two years.
United States Payrolls Pause… Slightly
Bank of Canada once again maintains overnight rate target at 1%
United States Employment Report – August Job growth unexpectedly cooled in August following the longest string of 200,000+ gains since the 1990s tech boom. Nonfarm payrolls rose 142,000 in August, the smallest gain this year and well below the consensus call of 230,000. The unemployment rate reached a cycle-low 6.1% while the participation rate returned to a 36-year low of 62.8%, resulting in a 64,000 drop in the labour force. Average hourly earnings rose 0.2% to keep the yearly rate at 2.1%, and the aggregate weekly hours worked rose a modest 0.1%. Although the employment rate slowed, businesses are still hiring and when they start paying their workers, consumers will ramp up spending and in turn sustain the expansion at a stronger pace.
The Bank of Canada announced that it is maintaining its target for the overnight rate at 1 percent, where it has been for four years. As a result, the bank rate is still at 1 ¼ percent and the deposit rate is ¾ percent. The Bank of Canada said it “remains neutral with respect to the next change to the policy rate: Its timing and direction will depend on how new information influences the outlook and assessment of risks.” In other words, the bank continues to be satisfied with the economic activity in the Canadian economy.
Important Economic Statistics
The Week Ahead United States Consumer Credit – July - Monday, September 8, 2014 at 3:00 pm
Canadian Housing Starts – August - Tuesday, September 9, 2014 at 8:15 am
Canadian New Housing Price Index – July - Thursday, September 11, 2014 at 8:30 am
United States Retail Sales – August - Friday, September 12, 2014 at 8:30 am
Ronald Chow, Chief Economist • ronaldchow@crescentschool.org