Signs of loosening but probably not enough yet for the BoC – CIBC

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Data released on Friday showed the Canadian economy lost 6,400 jobs in July, against consensus of a 21,100 increase. Analysts at CIBC point out there were further signs of loosening within the Canadian labour market in July, with a slight dip in employment contributing to another uptick in the unemployment rate.
They warn that a reacceleration in wage growth may lead the Bank of Canada (BoC) to believe that labour market conditions haven’t loosened enough yet.

Key quotes: 

“The reacceleration in wages and still low unemployment rate mean that today’s data are unlikely to convince the Bank of Canada that the labour market has loosened enough yet to sustainably achieve its 2% CPI target, despite the weaker headline jobs count.”

“Because of that we are, for now, retaining our forecast for one more interest rate hike, although some good news on the inflation front in two weeks time could be enough to prevent that.”