At present’s employment report for January, during which the unemployment fee ticked down, has triggered bond markets and economists to additional reel-in their rate-cut forecasts for the yr.

Regardless of a dip within the nation’s unemployment fee in January, at this time’s jobs report from Statistics Canada paints a extra difficult and blended image, economists say.

Even so, bond markets have lowered the chances of a Financial institution of Canada fee reduce in March to simply 16%. June stays essentially the most possible timing for the primary quarter-point fee reduce with 90% odds. Previous to at this time, markets had been pricing in 90% odds of a 50 bps discount.

On internet, 37,300 jobs had been created final month, consisting of a achieve of 48,900 part-time positions and a lack of 11,600 full-time jobs.

StatCan additionally reported that the nation’s unemployment fee ticked down 0.1 share level to five.7%, marking the primary decline since December 2022.

However whereas these figures recommend power in Canada’s labour market, specialists say the underlying particulars really level to weak point.

“If you drop out of the workforce and cease on the lookout for a job, you’re not counted within the unemployment fee. You’ve given up. Are extra Canadians giving up trying?” Bruno Valko, Vice President of Nationwide Gross sales at RMG, identified in a latest be aware to subscribers.

“Think about immigration and inhabitants progress and the job numbers launched at this time are horrible,” he added.

TD economist James Orlando added that the participation fee fell as a consequence of a 126,000 rise in inhabitants in January, however solely a internet addition to the labour market of 18,000. This, he mentioned, is “not a typical signal of a powerful labour market.”

The report additionally pointed to weak point in goods-producing sectors, with all 5 sectors down in January.

Wage progress for everlasting staff additionally slowed to an annualized 5.3% from 5.7%, in keeping with expectations.

Another reason for the Financial institution of Canada to stay on maintain

January’s mixed-bag employment report follows stronger-than-expected GDP progress in November, including another reason for the Financial institution of Canada to take its time in initiating its first fee reduce.

“The Financial institution of Canada is more likely to view this report as additional purpose for a affected person coverage stance,” wrote BMO chief economist Douglas Porter, including that the important thing takeaway is that there are nonetheless “no apparent indicators of stress for the economic system.”

“An honest job achieve, a slide within the jobless fee, and protracted 5% wage progress are hardly the stuff of an pressing name for fee cuts,” he mentioned.

At present’s outcomes triggered CIBC to reel in its rate-cut forecast for 2024, and now expects 125 bps value of fee cuts by the tip of the yr versus 150 bps beforehand.

“At present’s knowledge affirm that the Financial institution gained’t be in a rush to chop rates of interest, and we preserve our expectation for a primary transfer in June,” wrote CIBC economist Andrew Grantham. “Given indications from at this time’s knowledge and beforehand launched GDP figures that the Canadian economic system is in considerably higher form than beforehand anticipated, we now forecast 25bp fewer cuts by the tip of the yr.”