According to Royal Bank of Canada (RY.TO, RY), the increase in November employment was generally in line with market expectations of a 180K increase and was up from the 142K gain in October that was revised down from 161K previously. Less anticipated was the sharp drop in the unemployment rate to 4.6% from October's 4.9% which had been expected to be maintained in November.
RBC said the continuation of "solid" employment gains is "encouraging" as it indicates that businesses remain sufficiently confident about the economic outlook that they are prepared to invest in more workers. As well, RBC said, it implies growing income to fund further gains in consumer spending. RBC noted though overall GDP growth is expected to moderate from Q3's 3.2% increase, solid employment gains are projected to keep activity in the fourth quarter at an above-average 2.1%. Sustained above-average growth along with indications of tightening labour markets are expected to return the Fed to tightening mode at the upcoming FOMC meeting on December 14th with the fed funds range forecast to rise 25 basis points to 0.50% to 0.75%.
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