Canada: Wages worth tracking - TDS

Sandeep Kanihama FXStreet Contributor

Despite ongoing pockets of slack flagged by Governor Poloz, a closer look at wage pressures in Canada suggests that current levels of labour market tightness are already delivering a broad pickup in wage pressures, suggests Brittany Baumann, Macro Strategist at TDS.

Key Quotes

“We construct two types of wage growth trackers, one capturing broader trends and the other extracting more cyclical movements, both of which provide a more comprehensive picture of recent trends and the outlook of wages.”

“We find a pronounced uptrend in cyclical wage pressures that, consistent with continued strengthening in labour market conditions, is set to be maintained near 2.5-3% y/y in 2018- 2019, excluding the impact of minimum wage hikes.”

“These wage trends, which are more tied to monetary policy and the business cycle, will be important to watch going forward, and sustained improvement will push the Bank of Canada closer to the wire in our view, if not already. Moreover, the wage outlook in Canada warrants a continued gradual removal of policy accommodation. In an economy with the output gap now closed.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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