Today's statement ups the odds that the Bank of Canada will be back again with a 25 bp (basis point) 'Christmas present' in December.
I place more emphasis on jobs numbers than on confidence surveys in estimating consumers' attitudes. And that has not looked promising.
We expect the combination of a U.S. growth moderation and the lagged impacts of a strong Canadian dollar on factory employment to do a lot of the work in engineering that cooling in Canadian hiring, leaving the Bank of Canada with only another 50 basis points in rate hikes.
This was a month in which a number of one-time events conspired to mask the true strength of the economy.
Ahead of the storm clouds, the American job market was humming along nicely, a result that says little about where things will stand as the recent spike in energy prices begins to bite.
Looking only at 'affected areas' could understate the storm impacts, due to linkages between ports and more distant facilities.... we know that jobless claims have fallen off sharply as we moved past the storm impacts, another hint of underlying labor market vitality.
These confidence surveys are reflecting what people are reading -- that the economy is not creating jobs. It doesn't mean that people are not spending.
Given all the leverage that the household sector has built up, their confidence in rising home equity has been an important part of their willingness to take on all that (mortgage) debt.
It's oil and natural gas prices that move the hearts and minds of those following the Canadian dollar these days.
Copyright © 2024 Electric Goat Media. All Rights Reserved.