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Local Banks See BoC Undeterred By Jobs Report

CANADA
  • BMO: Some details were on the sluggish side, notably average hourly wage growth down a tenth to 3.3% Y/Y or half the rate of headline CPI inflation. Supply of new workers may be beginning to be the binding constraint on growth which won’t dissuade the BoC from their tightening path.
  • CIBC: A little weaker than expected but not enough to change the overall view of a very strong labour market. The BoC shouldn’t be deterred from another 50bp hike before reverting to 25bp moves.
  • The dip in wage growth from 3.7% to 3.4% Y/Y (permanent employees) could have been compositional, with wages biased higher in Apr’21 when renewed restrictions forced job losses in lower-paying service industries – this should drop out by Jun/Jul.
  • National: The report still depicts a strong labour market all over Canada compared to pre-pandemic levels - the BoC should get to neutral by summer (100bp hikes to 2-3% low end).
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  • BMO: Some details were on the sluggish side, notably average hourly wage growth down a tenth to 3.3% Y/Y or half the rate of headline CPI inflation. Supply of new workers may be beginning to be the binding constraint on growth which won’t dissuade the BoC from their tightening path.
  • CIBC: A little weaker than expected but not enough to change the overall view of a very strong labour market. The BoC shouldn’t be deterred from another 50bp hike before reverting to 25bp moves.
  • The dip in wage growth from 3.7% to 3.4% Y/Y (permanent employees) could have been compositional, with wages biased higher in Apr’21 when renewed restrictions forced job losses in lower-paying service industries – this should drop out by Jun/Jul.
  • National: The report still depicts a strong labour market all over Canada compared to pre-pandemic levels - the BoC should get to neutral by summer (100bp hikes to 2-3% low end).