Stocks Slide as Labour Data Disappoints in Canada, Boosts US Economy

Stock markets in Canada and the United States declined on Friday after the release of labour data from both economies. Statistics Canada reported that the previously hot labour market slowed down, with a loss of 42,000 jobs in August, while the unemployment rate remained steady at 6.4%. Sébastien Mc Mahon, chief economist at iA Financial Group, noted that despite the weak headline number, it supports the view that Canada's economy is strong.

McMahon said that hours worked is a better indicator of economic performance than just job numbers. He pointed out that the three-month annualized change in hours worked in Canada is solid. The Canadian benchmark index was also affected by gold prices, which fell due to positive US labour data causing investors to reprice the odds of higher interest rates from the US Federal Reserve.

The US government reported that employers added 162,000 jobs to their payrolls last month, exceeding expectations. This could give the Fed leeway to raise its benchmark short-term interest rate to combat inflation. The S&P/TSX composite index fell by 119.32 points to 36,513.80, while the December gold contract dropped US$63.30 to US$4,476.60 an ounce.