Bank of Canada hopes job growth will ‘pick up’ amid rate cuts: Macklem

Bank of Canada governor Tiff Macklem says the health of the labour market is one consideration feeding into the central bank's interest rate decisions.

The head of the Bank of Canada says he’s hoping that recent cuts to the benchmark interest rate will help to reignite hiring among Canadian businesses amid signs the labour market is weakening.

Governor Tiff Macklem spoke to reporters Tuesday after a speech to the Canada-UK Chamber of Commerce in London, U.K. His talk came just days after Statistics Canada reported the unemployment rate rose to 6.6 per cent in August, a seven-year high outside the pandemic years.

Asked for comment on the rising jobless figures, Macklem noted that the August data “continued what we’ve seen now for a number of months.”

Essentially, Canada’s labour force is growing more quickly than employers expanding their payrolls, driving up the unemployment rate despite an overall lack of layoffs.

“Yes, businesses are hiring, but they’re hiring much more slowly than people are entering the labour force,” Macklem said.

“To this point, we haven’t seen a big change in layoffs. If you were to see that, that would certainly be a concern.”

He noted that trend has particularly impacted Canadian youth and newcomers who are finding it difficult to break into the labour market.

With plans from the Liberal government to curb the flow of non-permanent residents into the country, Macklem said he expects the addition of new workers to the economy will slow.