Summertime Charts

by JDH on August 5, 2023

Let’s review some charts.  First, a long term view of the Canadian Labour Force Participation Rate:

As you can see, since peaking in 2003, the trend is down.  Let’s zoom in:

As you can see, the trend is accelerating.  The Labour Force participation rate is now 65.6%, which is higher than the 60% level reached at the depths of the lockdowns but low compared to historical norms.

As a result, last month, unemployment increased to 5.5%.  That’s the third consecutive monthly increase, and it’s now at its highest level since January 2022.

A deeper dive shows that unemployment is increasing in the construction sector, which is not surprising given the surge in interest rates over the last year.

Do these numbers indicate a booming economy?

I don’t think so, but we shall see.

One final point: the Canadian government bond 5 year yield is at it’s highest level since 2008.  Remember what happened in 2008?  And remember that it is 5 year bond rates that directly influence mortgage rates?

Not a pretty picture indeed.