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CANADA: Union Coverage vs U.S. Can Partly Offset Softer Labour Market [2/2]

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  • It’s important to note the differences in union coverage between Canada and the US.
  • The Canadian labour market has clearly cooled more quickly than the US, even if in both cases the increases in unemployment rates is mostly down to immigration-driven increases in the labour supply rather than outright job losses.
  • However, with public sector union coverage at 76% in Canada vs 33% in the US and private sector union coverage at 15% vs 6%, it’s possible that Canadian wage growth will prove to be stickier.
  • That can keep the BoC mindful of wage growth as an upside risk to inflation when considering the pace at which it normalizes monetary policy, for an argument against scaling up cuts to 50bps per meeting vs the 25bps seen over the three meetings since June.
  • BoC-dated OIS have recently built to 34-35bp of cuts for the Oct meeting, courtesy of the perceived increased odds of the Fed moving in 50bp clips after last week’s media influence. 

 

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  • It’s important to note the differences in union coverage between Canada and the US.
  • The Canadian labour market has clearly cooled more quickly than the US, even if in both cases the increases in unemployment rates is mostly down to immigration-driven increases in the labour supply rather than outright job losses.
  • However, with public sector union coverage at 76% in Canada vs 33% in the US and private sector union coverage at 15% vs 6%, it’s possible that Canadian wage growth will prove to be stickier.
  • That can keep the BoC mindful of wage growth as an upside risk to inflation when considering the pace at which it normalizes monetary policy, for an argument against scaling up cuts to 50bps per meeting vs the 25bps seen over the three meetings since June.
  • BoC-dated OIS have recently built to 34-35bp of cuts for the Oct meeting, courtesy of the perceived increased odds of the Fed moving in 50bp clips after last week’s media influence.