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Bank of Canada governor Tiff Macklem said that unemployment needs to rise in order to slow down inflation, although elevated levels of job vacancies could soften the blow. In a speech in Toronto hosted by the Public Policy Forum, Mr. Macklem said that Canada’s labour market is overheating, with unemployment near a record low and businesses struggling to find workers. This is feeding through into inflation, as companies bid up wages to compete for employees. “We need to rebalance the labour market,” Mr. Macklem said. “This will be a difficult adjustment. We want to do this in the best way possible for Canadian workers and businesses.” Mr. Macklem’s comments come on the heels of a blowout jobs report last Friday. Employment jumped by 108,000 in October, recouping all of the jobs lost during the summer slowdown. Average hourly wages were up 5.6 per cent that month compared to the previous year, while the rate of unemployment remained steady at 5.2 per cent as work force participation ro...

Bank of Canada governor Tiff Macklem said that unemployment needs to rise in order to slow down inflation, although elevated levels of job vacancies could soften the blow. In a speech in Toronto hosted by the Public policy forum, Mr. Macklem said that Canada’s labour market is overheating. This is feeding through into inflation, as companies bid up wages to compete for employees. “We need to rebalance the labour market,” Mr. Macklem said. “This will be a difficult adjustment. We want to do this in the best way possible for Canadian workers and businesses.” Mr. Macklem’s comments come on the heels of a blowout jobs report last Friday. Employment jumped by 108,000 in October, recouping all of the jobs lost during the summer slowdown. Average hourly wages were up 5.6 per cent that month compared to the previous year, while the rate of unemployment remained steady at 5.2 per cent as work force participation rose. The strength of the labour market is a challenge for the central bank. Mr. ...

Bank of Canada governor Tiff Macklem says rising interest rates will slow spending which will have an effect on employment rates. Macklem says the labour market right now is unsustainably tight and needs to rebalance but he does not expect the level of job losses seen in past economic downturns. The Canadian Press https://www.tausiinsider.com/video-jobs-market-needs-rebalance-to-rein-in-inflation-macklem-says/?feed_id=427294&_unique_id=649b11e2561a4

Parliamentary Budget Officer Yves Giroux's office decided to crunch the numbers to estimate what would happen if the Bank of Canada overstepped with its rate increases. Dave Chan/Tausi Insider After six interest rate increases totalling 3.5 percentage points – and with the promise of still more to come – there’s a growing urgency to the questions the Bank of Canada faces about its aggressive pursuit to snuff out inflation. How high is the central bank willing to go? How far is too far? And how much economic collateral damage might the bank inflict if its policy tips into overzealousness? With the question becoming an increasing preoccupation of Ottawa policy makers and a broad swath of the Canadian public, the Office of the Parliamentary Budget Officer decided to crunch the numbers to estimate what would happen if the Bank of Canada overstepped with its rate increases. Predictably, it’s not good. Arguably, it might be tolerable. But surprisingly, it might not make much difference...

Former Bank of Canada governor Stephen Poloz delivers a keynote address to a business conference, on Nov. 24 in Ottawa. Adrian Wyld/The Canadian Press As the Canadian economy slips toward something that’s going to look an awful lot like stagflation, it’s hard to avoid comparisons to the 1970s, when that term earned its infamy. But Stephen Poloz wants us to remember that there is one key difference: We’re a lot older now. The former Bank of Canada governor isn’t noting the nearly five decades of time passing, nor talking about some sense of older-and-wiser. He’s referring to demographics. When the economic doldrums hit nearly a half-century ago, the massive and economically influential baby boomer population was flooding into the labour market. Today, those same people are retiring in droves. That reversal creates a very different looking stagflation – and a mirror image of the pitfalls for economic policy makers. “The influx of boomers into the work force in the 1970s pushed up unemp...

A looming recession might provide a big push in the adoption of AI as weak economic conditions always provide the impetus for using machines to cut costs and raise productivity. Martin Meissner/The Associated Press As we prepare to kick off 2023, we are doing so knowing that the global economy is faltering while organizations are still being squeezed by high costs. On top of that, even a recession might not make much difference to the tight labour market they face. With technologies improving by leaps and bounds and companies looking for ways to improve the bottom line, the timing is just right for a huge uptick in AI use in a way that could transform the economy and labour market. When it comes to embracing AI, Canada is near the forefront. According to the 2021 Global Vibrancy Ranking on artificial intelligence from Stanford University, the country is in fifth place, behind the United States, China, India and the United Kingdom. The index is calculated using a number of metrics, i...

Alimentation Couche-Tard Inc. is one of eight Canadian companies pegged for long-term investing on the stock market, according to an RBC list. Graham Hughes/The Canadian Press Getting caught up on a week that got away? Here’s your weekly digest of Tausi Insider’s most essential business and investing stories, with insights and analysis from the pros, stock tips, portfolio strategies and more. New year, better financial outlook? Sure, interest rates remain high, as does inflation, and we’re teetering on the edge of a recession – but here’s the good news, according to Rob Carrick. The new year is expected to bring an end to hikes in interest rates, which the Bank of Canada raised seven consecutive times in 2022. We may even see them fall in the second half of 2023. Housing prices have also been dropping as of late, and are expected to continue to plummet this year – below $1-million in Toronto and Vancouver, if you can believe it. This will make buying a home more attainable for many C...

A hiring sign at a job agency in Mount Prospect, Ill., on Jan. 3. Nam Y. Huh/The Associated Press For months, the outlook for the U.S. economy has been a mostly bleak one: Inflation hitting a four-decade high, consumer spending weakening, interest rates surging. Most economists pencilled in a recession for 2023. An economic downturn is still possible. Yet in recent weeks, with inflation showing widespread signs of easing, a more cheerful view has gained traction: Maybe a recession isn’t inevitable after all. One reason for the tentative optimism is evidence that an acceleration in U.S. wages, which has benefited workers but also heightened inflation, is slowing. Federal Reserve Chair Jerome Powell has frequently pointed to fast-rising worker pay to explain why the Fed has had to raise interest rates so aggressively. Fed rate hikes, if carried out far enough and long enough, can weaken the economy so much as to trigger a recession. On Thursday, the government is expected to issue anot...

The Bank of Canada is heading into its Jan. 25 interest-rate decision with a different watchword: “data dependence.” Over the past eleven months, the central bank has pushed its policy rate up to 4.25 per cent from 0.25 per cent with single-minded determination. The question wasn’t whether it would increase borrowing costs at each meeting, but by how much. Now, with interest rates firmly in restrictive territory and inflation trending down, Bank of Canada officials have turned off autopilot and are poring over economic data for signs of whether it’s time to hit pause on monetary-policy tightening. “If we are surprised on the upside, we are still prepared to be forceful,” deputy governor Sharon Kozicki said in December, after the latest half-percentage-point rate increase. “But we recognize that we have raised interest rates rapidly and that their effects are working their way through the economy. In other words, we are moving from how much to raise interest rates to whether to raise ...

After a series of historic interest rate hikes, economists are left wondering whether job losses are next. High interest rates cause businesses and consumers to pull back on spending. As business slows, companies review their staffing levels and unemployment tends to climb. However, up until now, the Canadian labour market has kept its steam. “I think it’s surprised both market expectations and also the Bank of Canada’s expectations,” said BMO economist Shelley Kaushik. In December, the unemployment rate was five per cent, just above the all-time low of 4.9 per cent reached in the summer. In its latest monetary policy report, the Bank of Canada said it expects the full effects of rate hikes on the labour market to play out over a longer period. “Part of rebalancing demand and supply in the economy is rebalancing the labour market,” said Governor Tiff Macklem during a news conference on Wednesday. The comment came as the central bank raised its key interest rate for the eighth consecu...