Rosenberg Research said Friday it does not see wage-driven inflation pressures emerging in Canada despite April's average weekly earnings rising at their fastest annual pace in 12 months, according to payroll data released Thursday.
Rosenberg pointed to the Bank of Canada's June 10 Summary of Deliberations, which said the economy remained weak, was operating with excess supply and continued to show labor market slack.
"We do not fear wage-push inflation," stated Rosenberg.
Canadian SEPH payrolls rose by 22,000 in April, up from 5,700 in March, a solid monthly gain, pointed out Rosenberg. However, underlying labor conditions remain weak, with combined labor demand -- payrolls and vacancies -- just above zero, in line with subdued economic growth.
Slack is also rising, as the unemployment-to-job vacancies ratio increased to 3.2% in April from 2.9% in January, pointing to softer fundamentals despite stronger headline payrolls, added Rosenberg.
Against this backdrop, Rosenberg still views the balance of risks as tilted toward a potential Bank of Canada rate cut.