Canada lost 17,000 jobs in May, said Statistics Canada

General Michael Distefano 9 Jun

The Bank of Canada cited continuing strength in the labour market in announcing its decision to raise its key overnight lending rate to 4.75 percent.

By Josh Rubin Business Reporter
Friday, June 9, 2023

A help wanted sign is seen in a storefront along Queen St. W. in Toronto. Strong job growth and a tight labour market, according to conventional economic theory, lead to higher wages, something the Bank of Canada has argued is helping drive inflation.

The Canadian labour market is finally cooling off, at least a bit.

In its Labour Force Survey released Friday morning, Statistics Canada said 17,000 jobs were lost in May, the first time in nine months there was a net job loss. The unemployment rate rose for the first time since last August, to 5.2 per cent.

A consensus of economists surveyed by Bloomberg had expected the economy added 20,000 jobs.

Just two days earlier, the Bank of Canada cited continuing strength in the labour market in announcing its decision to raise its key overnight lending rate by 25 basis points — a quarter of a percentage point — to 4.75 per cent.

“The labour market remains tight: higher immigration and participation rates are expanding the supply of workers but new workers have been quickly hired, reflecting continued strong demand for labour,” the Bank said in announcing its increase, and dropping hints it would hike rates again at its July meeting.

Last March, the bank began an aggressive rate-hike campaign in a bid to drive inflation down, pushing its key overnight rate to 4.5 per cent from 0.25 per cent.

The theory is that by making it more expensive to borrow money, consumers — and businesses — will spend less, driving prices down and slowing the economy.

In January, a hike of 25 basis points (a quarter of a percentage point) came with a statement from bank governor Tiff Macklem that it was pausing hikes — at least temporarily.

But a steady stream of stronger-than-expected economic data — including several straight months of strong jobs growth — put an increase back on the table.

A tight labour market and strong job growth, according to conventional economic theory, leads to higher wages, something the Bank of Canada has argued is contributing to inflation.

In May, average hourly wages were 5.1 per cent higher than they were a year ago, Statistics Canada said Friday.

Josh Rubin is a Toronto-based business reporter. Follow him on Twitter: @starbeer


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Bank of Canada announces new rate hike

General Michael Distefano 7 Jun

The central bank has returned to rate increases after a pause

By Fergal McAlinden

The Bank of Canada has announced a 25-basis-point increase to its benchmark interest rate, returning to a rate-hiking policy after hitting a pause in its last two announcements.

The move, which brings that trendsetting rate to 4.75%, arrives amid a flurry of new data in the past month suggesting the economy is still running hotter than the Bank would prefer.

In its statement accompanying the decision, the Bank said it deemed monetary policy “not sufficiently restrictive” to restore the supply-demand balance and push inflation back towards its 2% target.

It noted that “concerns have increased” that inflation could remain persistently higher than that level, although its expectation that it will ease to around 3% by mid-summer remains unchanged.

That annual rate of inflation ticked unexpectedly upwards in April – rising by 0.1% over the prior month – and GDP growth continued at a pace of 3.1% in the first quarter.

Canada’s labour market, meanwhile, remains resilient in the face of the central bank’s efforts to slow the economy, adding 41,000 jobs in April, while the national housing market also shows signs of beginning to heat up again after a months-long slowdown.

The announcement marks a departure of sorts from the Bank’s apparent willingness in recent statements to keep rates where they are – but comes as little surprise, with about one in five economists surveyed by Bloomberg before the decision expecting rates to increase today.

Swap market traders had also raised expectations of an imminent jump prior to the announcement, fully pricing in a rate increase by July 12, the date of the Bank’s next scheduled decision.

The Bank kept its benchmark rate, which heavily influences variable mortgage rates in Canada, at a rock-bottom 0.25% throughout much of the COVID-19 pandemic – but as inflation surged last year, it began an aggressive rate-hiking campaign that saw a 425-basis-point spike in under a year.

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10 Money Saving Tips!

General Michael Distefano 6 Jun

When it comes to saving money, there are a lot of little things you can do that add up to make a big difference! 

Here are 10 of my favorite money-saving tips to help get you started today:

Automatic Savings are one of the most effective ways to save because you can’t spend what you can’t access! Instruct your employer to transfer a certain amount from your paycheck each pay period into an RRSP or savings account (or both) or set up automatic transfers in your banking account to coincide with your payday.

Consolidating Debt will result in a single monthly payment and lower interest costs! Many people don’t realize just how much money they are wasting on interest each month, especially if they have multiple loans or credit cards. Consolidating debt can help you gain control and maximize spend on the principal amounts to pay off loans faster.

Budget with Cash if you have trouble with overspending or find it too easy to use your card. After your bills are paid, take out the remaining cash (spending money) and only use that. Once the cash is gone, you’re out of money until the next payday! Having physical cash in hand can also help you think twice when making purchases.

Buying in Bulk is a great way to save a bit here and a bit there when doing your regular grocery shop or purchasing other items. Now you’ll need more? Stock up at once for bulk savings, which will help you in the long run!

Before Buying there are two things you should always do. The first is to wait at least 24 hours and the second is to shop around! If you still want to buy something the next day, make sure you get the best price available!

Plan Your Meals. Most of us don’t have time to make breakfast (let alone lunch!) before we fly out the door for work. But what if I told you that getting up an hour earlier could save you over $100 a week!? Just think about how much you spend going out for breakfast AND lunch each day. Groceries are a lot cheaper and you can even prep a few day’s worth of meals on Sunday while you get ready for the week.

Think in Hours versus Dollars every time you are looking to make a purchase, especially large ones to help you understand the TIME value of money. A new $24 Blu-Ray = 1 hour of work. A brand-new mattress = 41.67 hours of work. Understanding the time that went into earning money for a purchase can help with reconsidering frivolous items, or encourage you to look for the best deal on necessary products.

Utility Savings can help you save each month! Don’t blast your A/C with all the doors in your house open, don’t pump the heat without sealing cracks, and consider things like installing water-saving toilets and running cold-water wash cycles to save energy (and money!) every day.

Master DIY – While sometimes you can spend $120 to make a $20 item yourself, there are some things that do benefit from DIY, such as installing dimmer switches, that can help save you money in the long run.

Save Windfalls and Tax Refunds for a rainy day. A good rule of thumb is to put 50% of bonuses, tax refunds, or other windfalls into your savings account and put the rest against loans owing. While you might want to go on a shopping spree or plan a vacation, paying off your debt NOW will free you up in the future.

Michael Distefano
Mortgage Agent
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P: 905-357-5366 M: 905-246-5363
1-4687 Queen St Niagara Falls, ON, L2E 2L9 
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