• Notes From The Desk | Employment Data

Notes From The Desk | Employment Data Dec 03 2021

There is no stopping the Canadian job machine.

With several pandemic unemployment support programs ending in October, it appears people decided to take up many of the jobs on offer:

· 153.7k jobs created.
· Currently, 186K more people are employed than in Feb 2020.
· YoY wage growth accelerates from 2% to 2.7%.
· The unemployment rate drops to 6%.

Bottom Line

Risk skewed to Bank of Canada increasing rates earlier than April depending on how they view the impact of floods in BC and risks associated with the Omicron variant.

The US job data was a huge disappointment.

· 210k jobs created versus expectations for 550k.
· Weakness was widespread.
· The unemployment rate drops from 4.5% to 4.2%.
· YoY wage growth dips from 5% to 4.8%.

Bottom Line

The data suggest that either the available labour pool is smaller than consensus or that people are not willing to work at the wages on offer.
Employment growth is strong enough to keep Federal Reserve on a path to hike rates in the second half of 2022.
Risk is skewed to a tight labour market, putting upward pressure on inflation.

The potential for higher rates continues to be a headwind for fixed income.

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