Jobs data means a rate cut could still happen this week

There’s a rare double-decision day for interest rates this Wednesday as the Bank of Canada and the Federal Reserve both make their announcements.

Most economists are dismissing the prospect of a change for the BoC with all but two of the 30 economists polled by Bloomberg calling for a rate cut.

But the curveball for Governor Stephen Poloz and his team came Friday as data from Statistics Canada showed the economy lost 1,800 jobs in October, although the unemployment rate was unchanged at 5.5%.

And there was a sharp slowdown in the economy in the third quarter with Statistics Canada reporting an annual pace of GDP of 1.3%, down from a revised 3.5% growth in the previous quarter.

However, overall domestic demand was up 3.2% as residential investment gained 13.3% (annualized rate) and non-residential business demand also increased.

A rate cut is still unlikely though, despite the BoC citing the strength of the labour market as the key driver of household consumption. But jobs stats will be closely monitored in the coming months in case a trend develops.

“The overall trend in employment is still respectable so I don’t think it will by itself push BOC to an immediate cut, but the risks are clearly rising,” Vassili Serebriakov, FX strategist at UBS Securities LLC told Bloomberg.

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