Last Friday, jobs data from Canada and the US showed further evidence of the labour markets cooling off in each respective economy. Once a beacon of strength for each economy, labour markets have lost momentum in 2024, which is weighing on consumer strength and raising concerns of a potential recession. This likely sets the stage for more rate cuts from the Bank of Canada (BoC), and the start of interest-rate cuts from the US Federal Reserve Board (Fed).

• The Canadian economy added 22,000 jobs in August, rebounding from two consecutive months of job losses. Job gains were concentrated in the part-time sector, while the full-time sector shed jobs over the month.
• Due in part to job growth not keeping up with population growth, Canada’s unemployment rate edged higher to 6.6% in August from 6.4% in the previous month. This was Canada’s highest unemployment rate since October 2021, signalling how much Canada’s labour market has weakened in recent months.
• The story was much the same in the US, where the economy added 142,000 jobs in August. Job gains fell short of the 165,000 economists had expected, based on a Bloomberg survey.
• The US unemployment rate moved lower to 4.2% in August. August’s jobless rate was just below the 4.3% rate in July, which was the highest since late 2021.
• The relatively weak labour market report likely opens the door for a Fed rate cut on September 18. The BoC just cut interest rates at a third consecutive meeting, with another cut appearing to be a possibility before the end of the year.

Labour market uncertainty is a major concern for governments and central banks. Any potential weakness will hinder consumer and business activity, negatively impacting economic growth. In response, central banks have begun, or will soon begin, loosening policy to help stimulate economic activity.

If you would like to discuss this economic and market update or have questions about your finances and investments, please feel free to contact me anytime.