OTTAWA, (Reuters) - Stubbornly low wage growth in Canada should finally start picking up later this year as the economy overcomes a slowdown caused by weak oil prices and housing market softness, Bank of Canada senior deputy governor Carolyn Wilkins said on Thursday.
The central bank has long fretted over the anemic growth in compensation despite a tight labor market. The national average year-over-year wage growth of permanent employees remained at 1.5 percent in December, the lowest since the 1.2 percent seen in July 2017.
“We expect the economic expansion to pick up again ... in the second quarter of 2019. This should lead to a pick-up in wage growth as well,” she said in a speech in Toronto.
Wilkins said the bank would do its part to meet inflation objectives but made no mention of the need for further rate hikes. The bank held rates steady on Jan 9 and market traders expect it to sit on the sidelines again on March 6.
Wilkins said despite the unemployment rate hitting 40-year-lows, it would be “too hasty” to conclude that the job market was at a point where inflation pressure were starting to build.
Reporting by David Ljunggren and Julie Gordon; editing by Dale Smith