BOC: Gov Macklem: Growth Set To Be Soft In H2

Last week's upside surprise to initial claims may be down to fraud. 

• Recall initial jobless claims surprisingly jumped to 263k (sa, cons 235k) in the week to Sep 6. In the NSA jobless claims details, national claims increased 7.9k on the week but 15.3k of that came from Texas. It stood out significantly compared to recent years (see chart), with some (including MNI) initially concluding it may have been due to summer floods (for which unemployment claims had to be filed by Sep 4, though that's been extended).
• But there was a major twist yesterday, with the Texas Workforce Commission that reports the claims data saying (cited by Axios): "The increase in initial claims for unemployment insurance in the week ending September 6th is directly related to an increased volume of fraudulent claim attempts...Since Labor Day, we've observed an uptick in identity (ID) fraud claim attempts aimed at exploiting the unemployment insurance system."
• Axios writes: "The Labor Department did not respond to questions about whether Texas communicated that the fraud issue inflated its claims — and if so, why it was not flagged in the public release."
• This of course calls into question the national figure, which now will probably be disregarded as a nascent sign that the labor market continued to notably weaken in early September. The Texas numbers (and revisions) will be under special scrutiny in upcoming releases, of course.

• CANADA SCHEDULES 2025-26 BUDGET FOR NOV. 4

• The penultimate paragraph (in assessing...) has been left unchanged for several meetings and won't be changed here.
• MNI’s Instant Answers questions for the meeting include whether there are dissenters.
• Assuming a 25bp cut, this meeting may have as many as 3 dissents in favor of a larger 50bp cut: Vice Chair Bowman, Gov Waller, and new Gov Miran. (Waller and Bowman dissented to July's hold in favor of a 25bp cut).
• If so, it would mark the first time since 1988 that 3 Board members dissented (per Deutsche Bank).
• It’s also possible a regional president dissents in favor of a hold (if so, it would likely be Kansas City’s Schmid).
• In the Implementation Note, no changes to the administered rates are expected.

Analyst Consensus: The statement is widely expected to revise the language around the characterization of the labor market, to reflect the rise in unemployment and slowdown in payrolls growth. 

• There are no expectations that the Fed will change the language re the description of inflation, or the 2nd paragraph’s balance of risks. However we saw one expectation that the Fed could alter the forward guidance sentence (Citi: To remove “and timing”).
• Miran is widely expected to dissent in favor of a 50bp cut, but opinion is extremely mixed about whether other participants will dissent (in either direction).