Bank of Canada Looks for Further Wage-Growth Slowdown, Macklem Says

By Paul Vieira

OTTAWA--The Bank of Canada is looking for wage growth -- which is well above the prepandemic average -- to slow further as slack accumulates in the economy, Gov. Tiff Macklem said Monday.

Macklem said six-month gauges of pay increases indicate that wage momentum is waning. The most recent employment report, for instance, said average hourly wages increased 5.1% on an annual basis, whereas a six-month measure puts the wage gain at 4.4%. Average annual wage growth for the roughly two-decade period prior to the Covid-19 pandemic was 2.8%, according to Bank of Canada data.

The minutes describing deliberations among senior Bank of Canada officials ahead of the June 5 rate cut indicated persistent wage growth as posing an upward risk to inflation.

"We are starting to see evidence that wage growth is moderating," said Macklem, according to prepared remarks for delivery in Winnipeg, Manitoba. He added wages tend to lag broader labor-market adjustments, such as in Canada where the unemployment rate has climbed 1.1 percentage points in just over a year to May's 6.2% reading, or a 28-month high.

"We will be looking for wage growth to moderate further," he said.

Write to Paul Vieira at [e-mail]

(END) Dow Jones Newswires

06-24-24 1345ET