The impact of Canada’s jobs report on potential Bank of Canada rate cuts

Statistics Canada released employment data that showed the economy added 90,000 jobs in April — it’s strongest increase in 15 months — rebounding from a loss of 2,200 in March and beating analyst estimates for a gain of 20,000 positions.

Despite the increase, the unemployment rate held at 6.1 per cent, that national data agency said as the number of people looking for work continued to rise as Canada’s swelling population expands the workforce.

Here’s what economists are saying about the latest jobs numbers and what they could mean for the Bank of Canada and interest rates.

July, not June: Capital Economics
The latest jobs data give the Bank of Canada breathing room on when to cut interest rates, with economists at London-based Capital saying that a July cut appears more likely than one in June.

“There is only one inflation release before the Bank of Canada’s next interest rate announcement on June 5, but three consumer price index reports prior to the bank’s July 24 meeting,” said Stephen Brown, deputy chief North America economist.

Sticking with June: Desjardins
Desjardins Group is sticking with their call that the central bank cuts rates in June. While the jobs gains were attention-getting, the labour market is showing signs of “slack,” as Canada’s population aged 15 and over increased by 112,000 in April, outstripping the gains.

“In a position to cut in June”: Royal Bank of Canada
Canada’s jobs market has yet to make a case for the Bank of Canada to act with urgency on rate cuts, according to Nathan Janzen, assistant chief economist at the Royal Bank of Canada.

June cut in the cards: Alberta Central
Alberta Central chief economist Charles St-Arnaud is still predicting a cut at the June meeting, focusing on inflation as the Bank of Canada’s main concern.

“June rate decision a toss-up”: BMO
Bank of Montreal’s chief economist Douglas Porter noted that Canada’s “startling” jobs gain in April “will give the Bank of Canada some pause” on when to cut interest rates. Markets are now back to viewing the June rate decision as a toss-up, with the April CPI on May 21 looming even larger.