Here is my take on how US and Canadian employment momentum (or the lack thereof) will impact Canadian mortgage rates.
Last week we received the latest Canada and US employment data for July, and it confirmed that our two labour markets continued along diverging trajectories last month. (US employment rose by 528,000 while Canadian employment fell by 31,000.)
Jobs data have increased importance now because ongoing labour shortages on both sides of the 49th parallel have fuelled a steady rise in labour costs. To wit, the average wage in both countries has now risen by 5.2% year-over-year.
Both the Bank of Canada (BoC) and the US Federal Reserve (Fed) are concerned that rising labour costs will broaden inflation pressures, even as many of the prices that drove our initial inflation surge begin to moderate. If that happens, both central banks will have to keep raising their policy rates,…
