Canada's 6.8% jobless rate boosts bets for 50-point interest rate cut
CTV
Canada had 1.5 million unemployed people in November, propelling its jobless rate to a near-eight-year high outside of the pandemic era and boosting chances of a large interest rate cut on Dec. 11.
Canada had 1.5 million unemployed people in November, propelling its jobless rate to a near-eight-year high outside of the pandemic era and boosting chances of a large interest rate cut on Dec. 11.
The jobless rate rose to a more than expected 6.8 per cent in November, Statistics Canada said on Friday, a rise of 1.7 percentage points since April 2023. A rate that high was last seen in January 2017, excluding a few months in 2020 and 2021.
Currency markets stepped up bets for a 50 basis point rate cut to 80 per cent after the employment report, from 55 per cent earlier. Chances of a 25 basis point rate cut shrunk to just one in five.
The report, the last data release before the Bank of Canada announces its final interest rate decision of the year on Wednesday, also affected the Canadian dollar, which weakened by 0.48 per cent to 1.4090 to the U.S. dollar, or by 70.97 U.S. cents.
Yields of the government's two-year bonds dropped significantly by 12.8 basis points to 3.026 per cent.
"Today's data was the final piece of the puzzle before next week's Bank of Canada decision, and even though the piece didn't fit perfectly, we still see the picture of a struggling economy that needs the help of another 50bp reduction in rates," Andrew Grantham, senior economist at CIBC, wrote in a note.
Analysts polled by Reuters had forecast a net gain of 25,000 jobs and an unemployment rate of 6.6 per cent from 6.5 per cent in October. The economy added 50,500 jobs in November, data showed.
