Jump in Building Permits, Jobs Lifts Odds of BOC Rate Hike

The Canadian Dollar is up sharply on Monday after a report from Statistics Canada showed the value of Canadian building permits jumped in November from October. The report follows Friday’s hefty job gains that drove up the chances of another rate hike by the Bank of Canada.

Value of Canada Building Permits Up 14.1% in November

The value of Canadian building permits rose by 14.1% in November from October, Statistics Canada said on Monday.

The residential sector saw higher intentions for both the single-family and multi-family components, while both the industrial and institutional components were up in the non-residential sector. The value of building permits were up in seven provinces, with Ontario recording the largest increase.

Building Permits rose 14.1% versus an estimate of 0.4%. The figure represented a huge increase from the previously reported -5.3%.

Canadian Economy Registers Hefty Job Gains

The Canadian economy received a boost after a government report showed a massive jobs gain in December and the jobless rate unexpectedly declined, according to official data released on Friday that raised the likelihood of the Bank of Canada raising rates again this month.

The economy gained a net 104,000 jobs in December, far exceeding analysts’ forecasts, while the jobless rate decreased to 5% from 5.1% in November, Statistics Canada data showed.

Analysts surveyed by Reuters had forecast a net gain of 8,000 jobs and for the unemployment rate to edge up to 5.2%.

The average hourly wage for permanent employees rose 5.2% in December on a year-over-year basis, down from 5.4% in November.

Rate Hike Data Dependent

“The strong headline readings raise the probability of another 25 basis point hike at the January meeting,” said Andrew Grantham, senior economist with CIBC Capital Markets.

“However, the next CPI report and he BoC’s own business and consumer surveys, released in two weeks’ time, will also be important in making that final decision.”

Money markets now see a 75% chance of a 25-basis point rate increase in January, up from roughly 60% before the data.

The central bank, which hiked rates at a record pace of 400 basis points in nine months to 4.25% last year, has said it will be more data-dependent in setting the policy rate, according to the Financial Post.