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“They would hope that these guardrails actually are budgetary constraints, as well as important indicators about what future stimulus should look like,” Page said in an interview.
The opinion of those rating agencies could have a bearing on the federal government’s borrowing costs. Moreover, they would come as the government is currently projecting a pre-stimulus deficit of $381.6 billion in 2020-21, and in the absence of a firmer fiscal “anchor,” such as measuring debt to economic output.
Ottawa’s guardrails and lingering economic uncertainty could prompt debate around the government’s choice of fiscal guide as well.
“There are ways to have an anchor without leaving it dragging down the ship, i.e., without unduly limiting room to respond to the pandemic,” wrote Avery Shenfeld, chief economist at CIBC Capital Markets, in a note published on Friday.
When and if that debate plays out, Canada’s job market might be bouncing around a bit. Statistics Canada noted on Friday that its December labour force survey (LFS) could reflect the restrictions on in-person retail shopping in Toronto that came into effect after the November survey period, as well as measures taken in provinces such as Alberta and Manitoba to stem the spread of COVID-19.
The agency also reported employment in accommodation and food services fell for the second month in a row, with the pandemic-sensitive sector shedding 24,000 jobs in November. Another 26,000 positions were lost in information, culture and recreation, Statistics Canada said, marking “the first notable decline” for those businesses since April.
“Employment once again outperformed consensus expectations in November, but the additional coronavirus restrictions imposed since the LFS survey was carried out last month lead us to think that employment will fall back in December,” wrote Stephen Brown, senior Canada economist at Capital Economics, in a note published Friday.