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Written By: Benjamin Pipicelli, Lexx Thomson, Dorje Gyaltsen, & Gordon Huynh
Economics Newsletter – Jan 12, 2024
Canada’s Economy at a Glance
Canada’s Unemployment Yearly Wrap Up
Headline employment was unchanged in December, against consensus expectations for a modest 15K increase. The composition of jobs was fairly mixed. While gains were made in private sector paid employment, which is generally positive news, the overall mix of jobs was tilted towards part time rather than full time positions this month. Despite this tilting of employment and despite a negative impact from public sector strike action in Quebec, total hours worked increased by 0.4%, which is potentially positive news for monthly GDP and offset just over half of the decline seen in the prior month. The sector breakdown of employment pointed to a strong gain in professional & scientific services, which was counteracted by declines in other areas such as wholesale & retail and manufacturing. The drop in retail & wholesale was the third in consecutive months, which is not too surprising given the sluggishness in Canadian consumer spending seen recently. An 18K decline in agricultural employment was unusually large given the size of that sector. While the population continued to grow quickly, a two-tick decline in the participation rate meant that the jobless rate held steady at 5.8%, against consensus expectations for a rise to 5.9%. The employment rate of 61.6%, however, was the lowest since January 2022 when the Omicron wave of Covid resulted in brief shutdown measures. This ratio peaked at 62.5% at the start of last year.
News and Noteworthy
Bank of Canada expected to ‘cautiously’ start cutting rates in spring
Deloitte Canada expects the Bank of Canada to start cutting rates in the spring, albeit more cautiously than markets currently expect, even as pressure from higher rates weighs on the economy through 2024. In its 2024 economic outlook, Deloitte Canada forecasts that the central bank will start cutting rates in the second quarter, with the overnight target rate dropping to 4.25 percent by the end of the year. The benchmark rate is currently at 5 percent. Read more.
Canada’s job market ‘virtually unchanged’ in December; unemployment rate remains steady
Canada’s labour market added just 100 jobs in December and the unemployment rate held steady at 5.8 percent, according to Statistics Canada, as the economy continues to slow. The data agency said in a news release on Friday that total employment was “virtually unchanged” from November. Full-time jobs fell by 23,500 in December, while part-time employment increased by 23,500. Read more.
Oil and gas prices to slump to 2-year lows through 2024: Deloitte Canada
Oil and gas prices are set to trade at two-year lows through 2024, according to a new forecast, giving consumers a potential break on heating and fuel costs. Meanwhile, producers in Canada’s energy patch are expected to shrug off a year of lower prices, shielding themselves with cash-heavy balance sheets. A new report by Deloitte Canada calls for U.S. benchmark West Texas Intermediate (WTI) crude (CL=F) to average US$72 per barrel this year, thanks to a combination of growing supply and slowing demand. Read more.
Halting temporary resident admissions would deepen Canada’s recession
With Canada’s economic prospects increasingly dependent on population growth, a new analysis by Desjardins says cutting the number of non-permanent residents (NPRs) allowed into the country could deepen the expected recession and subsequent recovery. Canada’s population has surged, with the most recent gain of 430,000 people in the third quarter of the year, marking the fastest pace of population growth in any quarter since 1957. As of Oct. 1, Canada’s population was estimated to be 40.5 million. Read more.
More Canadians worried about debt levels, dipping into savings
Canadians are growing increasingly concerned about their debt levels, a new MNP survey has found, as higher interest rates and cost-of-living pressures weigh on consumers and their mental health. According to the latest quarterly MNP Consumer Debt Index survey, 63 percent of Canadians say they are concerned about their ability to repay their debts, up one percentage point from the previous quarter. Read more.
Economics Society News, Events, and Articles
– Keep an eye out on our Instagram page @uweconsoc for updates regarding future events
– Check out our most recent original article, “Navigating UBI in Canada – Unraveling Complexities Examining Pros and Cons and Assessing Contemporary Developments”, written by Stefan Venceljovski