There was more bad news, as the unemployment rate jumped to 7.1% from 6.9% in July, higher than the market estimate of 7.0%. This marked the highest unemployment rate since August 2021.
The Bank of Canada will be concerned with the weak job numbers, which support the case for a rate cut. However, with core CPI around 3%, well above the 2% target, the Bank of Canada is hesitant to lower rates. The next inflation report comes out a day before the September 17 rate meeting, and could determine whether the BoC holds or cuts rates.
US nonfarm payrolls fall to 22 thousand
US nonfarm payrolls disappointed with a marginal gain of 22 thousand, well below the upwardly revised gain of 79 thousand in July and the market estimate of 75 thousand. The unemployment rate edged up to 4.3% from 4.2%, the highest level since December 2021.
The money markets responded to the weak nonfarm payrolls report by fully pricing in a rate cut at next week’s meeting, with a 90% probability of a quarter-point cut and a 10% chance of a half-point cut, according to CME’s FedWatch. Prior to the jobs release, there was a 0% chance of a half-point cut.
