The November employment report literally set records. The economy created 94,100 jobs, the most in any single month since records began in 1976. The unemployment rate dropped to yet another record low of 5.6%. The participation rate rose +0.2%, and the workweek gained a sharp +0.9%. Overall it was a vibrant and energetic report. Fortunately for the Bank of Canada (BoC) there was one soft spot, which was that the +0.1 m/m increase in wages wasn’t enough to offset recent weakness, so the y/y rate fell to +1.7%. Earlier in the week the BoC had left the policy rate unchanged but had issued a substantially more dovish statement, and the slower wage growth supports its case. The BoC cited weakness in the energy sector, global trade issues suppressing demand, and “less momentum going into the fourth quarter.” Nonetheless it is most likely that the BoC will hike rates at least once in 2019. We forecast GDP growth of +2% in 2019 and +1.8% in 2020.
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Weekly Export Risk Outlook 12 December 2018