Economic Monitor: NAFTA, Tariffs and Employment Numbers

Canada’s economic surprise index has dropped lately while NAFTA negotiations remain a source of uncertainty as the employment numbers continue to progress. All things considered, National Bank Financial Economics Group believes the Bank of Canada will ‘stay put’ in March, reiterating that continued monetary policy accommodation is still needed to keep the economy operating close to potential and inflation on target. Recent employment figures announced on Friday March 9, 2018 confirm that approach. The Bank of Canada’s cautious approach to interest rate increases.

Canadian employment rose 15,000 in February 2018 according to the Labour Force survey, not far from consensus expectations. With the participation rate unchanged at 65.5%. The February 2018 employment report was a mix of good and less good news. While the overall job gains are welcome, the tilt towards part-timers and the public sector wasn’t particularly encouraging.

The outlook for employment remains positive with corporations reporting strong profits and labour shortages, although the pace of job growth is likely to be restrained until at least a revamped NAFTA is signed by policymakers.