Canada’s unemployment rate drops to 6.5%, but ‘mixed signals’ make it difficult to predict a 50 bps rate cut.

Canadian Economy Adds 46,700 Jobs in September The headline According to Statistics Canada, the Canadian labor market surprised everyone in September by adding a net 46,700 jobs and lowering the unemployment rate to 6.5%.

However, the interest rate-cut picture is complicated by “mixed” signals in that data and indications of continued economic downturn in two important Bank of Canada (BoC) surveys that were also released on Friday. In the wake of the new data, experts provided conflicting projections, and market odds of a 50 basis point decrease on October 23 fell before recovering somewhat.

According to BMO Economics, the general consensus prior to the announcement was that 31,500 new employees would be created in September. BMO’s own proposal called for the addition of 20,000 jobs, which was more modest.

The unemployment rate decreased for the first time since January, by 0.1 percentage points. The data was interpreted by some analysts as a sign of a robust labor market, which could reduce hopes for a more significant rate cut.

High employment rates, “weaker details”

The economist Nathan Janzen wrote that the “details behind the September job numbers were far more mixed than the headline employment and unemployment rate readings alone would imply.” As a result, RBC stuck to its base case expecting 50 basis-point decreases in both October and December.

The percentage of working-age individuals who are actively employed or looking for employment, known as the participation rate, decreased by 0.2 percentage points to 64.9% in September. The fall, which was the third in four months, “trims some of the potential enthusiasm from today’s jobs data,” according to a note from Geoff Phipps, a trading strategist and portfolio manager at Picton Mahoney Asset Management. But he contends that it was foolish to depend only on one data release.

Particularly among young people aged 15 to 24, employment increased by 33,000, up 1.2% from August. In September, private-sector employment increased by 61,000 (a 0.5% gain) for the second consecutive month, while public-sector employment decreased by 24,000 (a 0.5% decline).

Rate cuts of half a point by the Bank of Canada would be “justified.” Here’s why.

Following three interest rate decreases in its cycle at a tentative pace of 25 basis points, many analysts anticipate that the Bank of Canada will take a significant step lower in its decision on Wednesday.

The policy rate of the central bank is at 4.25 percent after the most recent quarter-point reduction in early September.

However, the Canadian economy has undergone significant transformation since then.

The central bank’s governor, Tiff Macklem, has stated in recent speeches that the Bank of Canada is just as worried about inflation falling too low—below two percent—as it is about price pressures remaining too high.

Large bank economists from Scotiabank, RBC, CIBC, and BMO have predicted a significant increase this week. In a note to customers, senior economist James Orlando of TD Bank acknowledged the mounting argument for a half-point cut but contended that indications of labor market resiliency elsewhere call for the central bank to make another quarter-point cut. In a note to clients on Friday, Avery Shenfeld, chief economist at CIBC, even went so far as to up the stakes.

Although he insisted that CIBC’s prediction is for a 50-basis-point decline on Wednesday, he contended that a 75-basis-point “mega-move” would also be possible.

With the expectation that the policy rate will be lowered by at least 75 basis points between now and the end of the year

Will Canada be enforcing more stringent visa regulations for international students? Effects on students in India 

Canada is making it clear to its overseas students that not all of them will be welcomed in the nation.

To curb immigration in the face of rapid population growth, the Canadian government is currently evaluating how it distributes long-term visas for international students. The need to match the need for domestic labor in the labor market with the surge of international students has been emphasized by Immigration Minister Marc Miller.