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Canada's unemployment rate unexpectedly jumps to 5.4% as economy lays off more jobs

by Julie Gordon

OTTAWA (Reuters) – Canada shed jobs for a third straight month in August and the unemployment rate unexpectedly jumped, Statistics Canada data showed on Friday. to 5.4%, suggesting higher interest rates are starting to cool an overheated economy.

Net economic loss 39, 700 August jobs, lack of analysts’ Predict, it will increase 15, . The unemployment rate was also lower than expected, with analysts forecasting a modest rise to 5.0% from a record low of 4.9% in July.

“I think that could be used as a reasonable indication that the economy is actually slowing,” said Andrew Kelvin, chief Canada strategist at TD Securities.

“When you see the rise in unemployment, it does suggest that the labor market may be starting to loosen up a little bit, although it’s not a complete process, it’s going to be a slow process,” he added road.

Canada has lost a net 113, 500 job-months over the past three years, the vast majority Working full time. Despite the drop, full-time employment was still 3.9% higher than a year ago, Statscan said.

Last month employment fell mainly among young women and the elderly 55 to 66. The overall engagement rate rose to 15.8% to 15, 200 people joined the labor market.

Wage growth continued to accelerate in August, up 5.6% year-over-year from 5.4% in July, and more people indicated plans to leave in the future 12 month’s current employment, with compensation and benefits as the primary reason.

Wage pressure economists say this could fuel inflation, which could keep the Bank of Canada in rate hike mode.

“I think the central bank will be more focused on the wage aspect – moderately said Derek Holt, vice president of capital markets economics at Scotiabank.

The Bank of Canada raised its policy rate to 3.15% on Wednesday, reaching the highest level in 2019 and made it clear that further gains will be expected as it battles inflation near four-year highs. tight policy.

The Canadian dollar gave up some of its previous gains after the data. It was up 0.4% at 1.3035 against the US dollar or 76. 72 cents.



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