Good Jobs Report News, Bad Interest Rate News

Jobs > Rates

Is it good or bad?

If you’ve been following recent finance news, you’ve probably heard about the new Jobs Report numbers and that this will give the Bank of Canada (BoC) a reason to continue raising interest rates. Though I don’t think raising interest rates is the only way to manage inflation, it is definitely the approach the Canadian Banks seem to be taking. But why does the Jobs Report have anything to do with raising interest rates?

The jobs report, also known as the employment situation report, is a key economic indicator that reflects the state of the labor market in Canada. It includes data on the number of people who are employed, the unemployment rate, and the number of new jobs created in a given month. This information is closely watched by investors, policymakers, and other stakeholders, as it can provide insights into the overall health of the economy.

According to the January 6th Statistics Canada report, Canada added 104,000 jobs in the month of December. Which was significantly higher than the 5,000 additional jobs they were anticipating. This pushed the unemployment rate down to five percent (5%).

So, how can a positive Jobs Report affect interest rates?

Well, Interest rates can be affected by the jobs report because it can provide clues about the direction of inflation. If the jobs market is strong and there is a low unemployment rate, it may indicate that there is strong demand for labor, which can lead to wage increases and potentially higher prices for goods and services. In turn, this can lead to higher interest rates, as the Bank of Canada may seek to keep inflation in check by raising its benchmark interest rate. On the other hand, if the jobs market is weaker and there is a high unemployment rate, it may suggest that there is less demand for labor and less upward pressure on prices, which could lead to lower interest rates.

Although rising interest rates do typically have a noticeable impact on the real estate market, it’s not all doom and gloom. When you understand the relationship between high interest rates and bonds, then understand the correlation between Bonds and Fixed Rate Mortgages, things don’t look terrible for the upcoming fixed rates for mortgages.

So, whether you’re looking to upgrade your current home or buy your first home, 2023 should still have plenty to offer anyone with real estate goals. That said, working with the right realtor will make all the difference.