Canada's Job Picture Stays "Lukewarm", Says Rosenberg Research

Canada's May Labour Force Survey (LFS) showed an 8,800 gain, beating the consensus decline of 10,000

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Bank of Canada's future path for interest rates still cloudy

There is a diversity of views among members of the Bank of Canada's governing council on the best path forward for interest rates as they assess the pressures that trade disruptions could have on inflation, according to a summary of their deliberations released on Tuesday. 'The weaker the economy and the more downward pressure on inflation, the more there would be a need to lower the policy interest rate further,' the deliberations said. 'However, if the recent firmness in underlying inflation were to persist, it would be more difficult to cut the policy rate.' The summary accounts for meetings that ran from May 30 until June 4, when the central bank decided to hold its policy rate at 2.75 per cent for the second time in a row. Its decision was made after the Canadian economy beat expectations during the first quarter by growing at an annualized rate of 2.2 per cent. The strong growth was mainly due to a pull forward in exports as businesses attempted to beat United States President Donald Trump's tariffs. Members of the governing council expect the second quarter to be weaker as domestic demand remains subdued. In April, despite inflation coming in at 1.7 per cent, measures of core inflation came in hotter than expected. 'Members noted that measures of underlying inflation had come in higher than they expected since the beginning of the year,' the minutes said. 'They agreed they would need to watch developments in inflation across CPI components carefully to gauge how inflationary pressures are evolving.' During the rate announcement, Bank of Canada governor Tiff Macklem said higher core inflation can be partly attributed to higher prices for goods, including food, and may reflect the effects of trade being disrupted. But he said it was still too early to see the impact that retaliatory tariffs are having on the consumer price index. In April, policymakers noted food prices increased by 3.8 per cent. They also discussed the price increase in services, with some noting it could be a one-time occurrence. The council also discussed the survey results from its regional outreach, which showed businesses anticipated increased costs from tariffs and having to rework their supply chains. 'Many reported that they would be passing on these extra costs to their customers in the form of higher prices,' the minutes said. The deteriorating labour market remains a concern, too. The unemployment rate hit 6.9 per cent in April, driven by job losses in trade-sensitive sectors such as manufacturing. The situation worsened in May, with the unemployment rate climbing to seven per cent, the highest it has been since 2016. 'Data from the April Labour Force Survey did not indicate that the deterioration of labour market conditions in these sectors had spread to other sectors of the economy,' the deliberations said. 'But this weakness had not been offset by strength in other sectors.' During its April decision, the central bank presented two scenarios as opposed to a forecast. In the first scenario, a trade deal is achieved and tariffs are lifted, but growth stalls in the second quarter and then averages 1.6 per cent through the end of 2027. The second scenario assumes a protracted trade war, with gross domestic product contracting for four quarters, averaging about minus 1.2 per cent. Looking forward, policymakers were encouraged by recent negotiations between the U.S. administration and other trade partners, which puts the likelihood of a protracted trade war outlined in its second scenario less likely. However, members acknowledged U.S. trade policy remains uncertain, with Trump's decision to double tariffs on aluminum and steel. On June 4, Macklem said he was hopeful that the central bank could provide a firmer forecast for its July decision, but that uncertainty remains high. Don't assume further rate cuts from the Bank of Canada, Poloz warns Canadians looking for more interest rate relief might be out of luck 'In light of the considerable uncertainty about trade policy and its impact on the Canadian economy and inflation, governing council members agreed to reiterate in their communications that they would proceed carefully by being less forward-looking than usual, with particular attention to the risks,' the minutes said. • Email: jgowling@ Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

Yahoo

13-06-2025

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UK regulator gives thumbs down to household wealth statistics

LONDON (Reuters) -Britain's statistics regulator ruled on Friday that official data on how rich British households are can no longer be treated as reliable, in another blow to the Office for National Statistics. The suspension of accredited status for the data by the Office for Statistics Regulation comes as the ONS is under investigation by the government over long-running problems with labour market data and follows a significant error in April's inflation data and the suspension of producer price figures. "Declining response rates and a lack of investment have significantly impacted the quality of the survey data, which measures the financial wellbeing of households across Great Britain," the regulator said. The most recent version of the wealth data, published in January, stated that the median British household had wealth of 293,700 pounds ($397,552), with the top 10% of households being worth at least 1.2 million pounds and the bottom 10% under 16,500 pounds. The regulator said the survey, which began in 2006, had provided "crucial economic data on assets, savings, debt and retirement planning that informs state pension levels, academic research, and both monetary and fiscal policy development." The regulator said it had given the ONS instructions on how to improve the data and expected a progress report in September. Declining response rates lie at the heart of the problems with the ONS' Labour Force Survey - used to calculate the unemployment rate and inactivity in the labour force, key data points for the government and the Bank of England. The BoE and the regulator have said the fall in responses to the often lengthy ONS surveys appeared sharper than in other countries which collect similar data. ($1 = 0.7388 pounds)

Yahoo

09-06-2025

• Yahoo

Canada's Job Picture Stays "Lukewarm", Says Rosenberg Research

Canada's May Labour Force Survey (LFS) showed an 8,800 gain, beating the consensus decline of 10,000