The Canadian economy’s performance is well on the mark. According to the latest data, nearly 41,000 jobs have been added to the economy in the month of February. The jobs added have outnumbered the predictions. Strong population growth is a major advantage in keeping the economy going strong. Educated professionals, trading in their skills, are strongly meeting the demand. The average hourly wages rose by 5.0% in the month of February, as per the reports of Stats Canada. However, the central bank continues to keep the interest rates high because the wage growth is not high enough.
Although the unemployment rate has slightly increased, the number of people available for jobs is continuing to grow rapidly. Some interesting insights to notice, however, are that many Canadians are continuing to take up gig work for to supplement their income sources, and in some cases, as the main source of income.
Overall, it appears the labor market is remaining steady, and with consistent employment opportunities becoming available, it is a net gain in the number of openings available for the public, even as the unemployment rate sees a slight increase. The wage trends and the shift in job vacancies indicate that the labor market is moving towards normalization. A surge in jobs is certainly occurring again, with many full-time opportunities becoming available. However, talent shortage continues to loom over the labor market, requiring more skilled workforce to become available for various industries.
There are predictions indicating a potential dip in interest rates in the second quarter of 2024, with the possibility of minor further reductions after that. Industry leaders are hopeful that interest rate cuts could be a reality soon if inflation is controlled and other economic factors cooperate.
Once the interest rates see a cool down, the volume of refinancing may go up because individuals who made home purchase decisions at high mortgage rates. Also, when the rates are high, the number of people looking to take a loan would be much lower.
According to the Bank of Canada, as of Wednesday, it may be early to expect news on the rate cuts. They would be looking at more factors before making decisions on interest rates, according to reports.
When the economy is strong, interest rates tend to go high, and when the economy is experiencing poor growth, it leads to lower rates. Borrowing of loans and business expansion happens when the economy is strong. Although the credit score is one of the factors that affect your interest rate, the economy’s climate also plays a bigger role in the interest rate offered by banks.
In a normal economic scenario, it’s often seen that when businesses tighten their budgets, wage growth slows, and interest rates could also be lowered. This encourages borrowing and spending. When the economy is strong, the demand for money goes up. The cost of borrowing becomes expensive, helping to control price rise.
The hourly rates on average are sitting between $17-$21 an hour. There is just a 5% increase from a year ago. There is still a dip from earlier months. If the economy improves, then more companies will require a skilled workforce, resulting in a competition which will lead to better wages for workers.
Although there is an abundance of labor supply in the market, the lack of skilled workforce continues to see that the employment rate witnessed only marginal decrease despite many jobs being added to the economy.
The labor market in the province seems to be returning to pre-pandemic levels, and with the economy adding nearly 41,000 jobs in February, it is a good sign, but the lag is due to population growth and skill shortage.
In the US, the economy has witnessed growth, which shows there is improvement in the production of goods and services, and the unemployment rate at 3.7% as of December last year, 2023, is an indication of plenty of jobs in a tight labor market. Although inflation has come down by a slight percentage, there is still concern because of lesser consumer spending. Although the economy in the US does not come under recession, the growth is slow due to high interest rates and inflation.
Job boards like LinkedIn, Workopolis, and Indeed consistently show full-time positions across various industries, indicating a demand for full-time workers. Employers showing interest in full-time hires after heavy collaborations with contractual and remote service providers is also an indication of improvement in the economy.
The interest rates are expected to decrease, and this might happen in the latter half of 2024. The current rates are expected to stay where they are for a while, and most likely see a decrease after June, as the banks aim to balance inflation and economic growth when there is a sign of cooling in inflation, and the economy experiences a dip in interest rates.
The Canadian dollar as of today, 8 March 2024, is around 0.73 C$ to one US dollar, which is a slight increase from yesterday or even in comparison to a year ago. Currency market continues to fluctuate throughout the day, however.
The agriculture and manufacturing sector saw a significant number of job losses, to a tune of more than 6,000 jobs, but with nearly 47,000 jobs added in the service sector like Technical, Professional, Food and Lodging, and Scientific sectors, it is evident that more employment opportunities have been added to the market.