10 may 2010
Monthly job gains reached the number of 108,700. It’s the highest number since 1976, exceeding even the most optimistic forecasts in a Reuters poll – 25,000 new jobs. The percentage increase (0.6%) was the largest since August 2002.
“I think it’s great… It can be another sign of Canadian economy’s recovery. Everything is even better than we could expect at the beginning of the year,” said Steve Butler, Scotia Capital.
“If anybody had some doubts about interest rates rise, I suppose, now they don’t… the process is going to start soon,” said Craig Wright, Royal Bank of Canada.
June rate hike
The central bank took a first step on the road to rate increase by removing a commitment to keep rates at the level of 0.25% until the end of June.
In a Reuters poll (after the report), Canada’s 12 main securities dealers predicted overnight of 0.50% to be set on June 1. By the way, in the previous April poll, 11 expected a first move in June.
Nevertheless, some of them are not sure about the future hike because of the European debt situation and recent unstable movements on financial markets.
Of course, this uncertainty has led to changing expectations. For example, before the jobs report the future rates changes had only a 39.7% of probability, and after that – it jumped to 65.4%.
But even in a relatively stable Canada, the volatile European situation made people hesitate, so it’s not so easy to guess what the next move will be.
“Yes, Canadian economy is strong, and that’s why Mark Carney might want to raise rates. But in the same time, we can be seriously affected by Europe. In the end, it’s all in his hands,” – said John McCallum, a liberal legislator.