The Globe and Mail reports in its Friday edition that Canadian Imperial Bank of Commerce economist Royce Mendes says the Bank of Canada has a rosier view of the economic landscape than the United States Federal Reserve. The Globe's Barrie McKenna writes that Mr. Mendes says that means another rate hike is likely later this year.
Recent tame wage growth gives the BOC a reason to move slowly on rate hikes because it means there is still slack in the economy. Senior deputy governor Carolyn Wilkins acknowledged on Thursday that wages are not increasing as fast as the bank anticipated now that the economy is near full employment and the jobless rate, at 5.6 per cent, is lower than it has been since the mid-1970s.
Wages grew at about 2.5 per cent last year in Canada. Based on job-market fundamentals, wages should be rising at about 3 per cent a year, Ms. Wilkins said.
Ms. Wilkins offered two new possible explanations for the wage puzzle -- a slower rate of Canadians changing jobs since the most recent recession and the growing number of people working "non-standard" jobs, including self-employed contract or "gig" work, such as driving for Uber.
She said about 700,000 Canadians are now doing non-standard work.
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