TORONTO -- Canada's unemployment rate fell back to four-decade lows, but sluggish wage increases and slumping exports offer little evidence the economy is running hot enough to warrant accelerated interest rate increases.
Statistics Canada released jobs data late last week that showed modest employment gains, but with a shrinking labor force and the slowest wage gains in a year. A separate trade report continued to show sluggish flows in September.
The numbers reveal a lukewarm economy, one that is unlikely to convince the Bank of Canada a faster pace of rate increases is needed. The central bank has increased borrowing costs five times since mid-2017. Odds for an increase at the December meeting fell to 25 percent, from 30 percent Thursday.
"Canada's economy isn't roaring ahead, but it still sits at what looks like full employment," Avery Shenfeld, chief economist at CIBC Capital Markets, wrote in a note to investors.
The jobless rate and labor supply numbers provide evidence for an economy that's close to capacity. The unemployment rate fell back to 5.8 percent in October, matching a four-decade low. That was due in part to an 11,200 increase in employment, but also a falling labor force, which was down 18,200 for the month.
SundayMonday Business on 11/04/2018
Print Headline: Slack pay, falling supply taint gains