Decline of unemployment rate – Statistics Canada has released employment data for September, and the news is excellent! The unemployment rate was the ninth consecutive monthly decline (-0.1% in August) to 6.2%, the best performance in eight years. Who are the main beneficiaries of this encouraging statistic? The 28,000 or so workers aged 55 and over who found a job during August, and Ontario, which saw its unemployment rate fall to 5.7%, the lowest rate since January 2001.
Should we celebrate?
At first glance, of course! However, lets remain cautious, since other related economic indicators are perplexing. Certainly, Canadians are employed as they have not been for a decade, and that is a good thing. The reduced availability of labour would be expected to exert upward pressure on wages due to supply and demand. But this isn’t happening. Wages have increased by only 1% over the past year, not enough to cover the 1.2% rise in consumer prices (July 2016 to July 2017). By all appearances, and even though there are now more of them, workers’ bargaining power has not increased.
This 6.2% unemployment rate is evidence of the good performance of the country’s economy. But with consumer spending and inflation just as energetic, the Bank of Canada wants to prevent the economy from overheating and has inched up the prime rate by a quarter of a percentage point. Today it is at 1%. For Canadians, this means higher interest rates for borrowing, and particularly consumer borrowing, which we all enjoy.
So full employment doesn’t mean the end of our collective financial worries!