Canada’s economy has been making a solid recovery, and it turns out it’s even stronger than thought. National Bank of Canada (NBF) points to this morning’s employment revision. A routine revision from Statistics Canada (Stat Can) shows a sharp climb for employment. In the bank’s opinion, this further strengthens the reason for the Bank of Canada (BoC) to raise rates. The only reason not to increase rates is if they see geopolitical tensions turning into economic disruptions.
Canadian Job Numbers Received A Large Upward Revision
Canada’s national statistics agency made a routine data adjustment, showing a stronger economy. Stat Can revised employment data to show 234,000 new jobs over the past two months. The revision shows an additional 26,000 jobs in December, which now comes in at 78,600 employed people. The case for Canada to raise rates was strong before. This revision shows the economy is recovering even faster than thought.
Canada: Revised Data Shows Stronger Job Creation At The End of 2021
The two-month change in the number of Canadian jobs. Numbers are shown for both the previous and current seasonal adjustments.
Source: National Bank of Canada; Statistics Canada.
Canadian Job Data Revisions Due To Routine Model Changes
The reason for the revision is the annual changes of the seasonal adjustment model. It’s a routine procedure that occurs after a seasonal change. This one impacts only data from 2019 to 2021, according to the agency.
“While this practice does not change the level of unemployment over a full year, it can change the distribution of momentum in a given year,” wrote Stefane Marion, chief economist at NBF.
In a research note to the bank’s financial markets clients, he reiterates the economy is ready for higher rates. Every economic indicator Canada has produced shows the economy needs higher interest rates.
“If the BoC chooses to keep its policy rate unchanged this week, it will be because of geopolitical concerns (Ukraine), not because of a lack of strength in Canadian economic data,” ends the economist.