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Market Wire - Canadian Jobless Rate Hits Record Low, Bolstering Bets on 50-Basis Point Bank of Canada Hike

CalendarApril 8, 2022
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Karl Schamotta, Chief Market Strategist, karl.schamotta@corpay.com

Canadian unemployment fell to a record low last month as businesses returned to full operations and hiring continued. Data released by Statistics Canada this morning shows 72,500 positions added in March, driving the unemployment rate down to 5.3 percent from 5.5 percent in the prior month - marking the lowest since the agency began collecting comparable records in 1976.

Average hourly wages grew 3.4 percent on a year-over-year basis, up from the 3.3 percent pace recorded in February.

Economists had expected a 80,000-job gain, with unemployment falling to 5.3 percent.

The monetary policy implications are clear: with the economy now overshooting most measures of “full employment”, wages accelerating, and prices continuing to rise, the Bank of Canada is widely expected to upgrade its inflation forecasts and hike rates by 50 basis points when it meets next week.

The Canadian dollar climbed on the release, but remains sharply weaker on the week.

Yesterday’s unexpectedly-modest federal budget release failed to move the exchange rate, with more favourable debt projections and a net new $29 billion in spending doing little to shift expectations for economic growth.

Oil prices have fallen more than 3 percent this week on falling Chinese demand projections, and as coordinated strategic petroleum releases by the United States and other members of the International Energy Agency have acted to alleviate supply fears. West Texas Intermediate is trading at $95 a barrel, while Brent is holding below the $100 threshold - both near levels that prevailed ahead of Russia’s assault on Ukraine.

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