TORONTO/OTTAWA (Reuters) - A recent weakening in Canada’s labor market, underscored by major job losses in November, is unlikely to weigh heavily on future monetary policy decisions, Bank of Canada Governor Stephen Poloz said on Thursday.
Canada shed an unexpected 71,200 jobs last month, the biggest decline since 2009, while the national unemployment rate rose to 5.9%, the highest in more than a year. Analysts say a repeat of the weak numbers could force the central bank to rethink its monetary policy.
The Bank of Canada has left rates unchanged since October 2018 even as several of its counterparts - including the U.S. Federal Reserve - have eased.
Asked if confidence in Canada’s economic resilience had been diminished by the jobs data, Poloz said it had not.
“No, we don’t normally put a lot of weight on individual data points, especially in the labor market report, which is a very volatile report,” he told reporters in Toronto.
“You tend to see through these things and watch the trend, And the trend has been quite a positive one for the labor market,” he added, saying the economy was operating close to its potential.
The labor market unexpectedly shed 1,800 jobs in October despite a boost from hiring related to the federal election.
Investors have reduced bets that the central bank will cut interest rates over the coming months after it pointed last week to early signs the global economy was stabilizing and sources of resilience in Canada.
Future interest rate moves, Poloz repeated on Thursday, would depend on the bank’s assessment of the damage done by trade conflicts against sources of economic resiliency.
Low interest rates and slow economic growth, he told a business audience earlier, will likely persist as the world grapples with structural factors such as a demographic slowdown and sluggish productivity.
Poloz, who said last Friday he would retire in June, stressed he was not making a near-term prediction about the Canadian central bank’s interest rate policy.
Global economic growth since the 2008 crisis had been disappointing, he said, noting population growth was slowing, while trade conflicts were hitting productivity.
“On balance, then, it looks like the global economy is set for continued slow economic growth for mostly structural reasons,” Poloz said. “For these same reasons, this means that low interest rates are likely to persist too.”
Reporting by Kelsey Johnson in Ottawa and Fergal Smith in Toronto; Editing by Nick Zieminski
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