Canada's job market delivered a significant surprise in October, adding 66,600 new positions and pushing the unemployment rate down to 6.9 percent. This unexpected growth, reported by Statistics Canada, challenges recent economic forecasts and strengthens the argument for the Bank of Canada to maintain its current interest rate policy.
The results starkly contrast with analyst expectations, which had predicted a loss of 20,000 jobs and a rise in the unemployment rate to 7.2 percent. The strong performance marks the second consecutive month of positive job data, suggesting a potential stabilization in the labour market after a volatile summer.
Key Takeaways
- Canada added 66,600 jobs in October, defying forecasts of a 20,000 job loss.
- The national unemployment rate fell to 6.9% from 7.1% in the previous month.
- The strong data increases the likelihood that the Bank of Canada will hold interest rates steady in its next decision.
- Job gains were driven entirely by an 85,000 increase in part-time positions, while full-time employment decreased.
- Youth employment saw its first increase since January, a positive sign for a struggling demographic.
A Second Month of Unexpected Strength
The October employment figures build on a positive trend that began in September. Combined, the last two months have added 127,000 jobs to the Canadian economy. This recent surge effectively cancels out the 106,000 positions lost during a weak period in July and August.
This pattern of volatility has characterized the nation's labour statistics recently. Economists are now closely watching to see if this newfound momentum is sustainable or another temporary swing in the data.
Volatile Year for Canadian Jobs
The Canadian labour market has experienced what BMO chief economist Douglas Porter has previously described as “wild swings.” A surprise gain of 83,000 jobs in June was followed by significant losses in July and August, only to be offset by strong gains in September and October. This makes discerning a clear underlying trend challenging for policymakers.
Bank of Canada Likely to Remain on Sidelines
The robust job report has immediate implications for monetary policy. Many economists believe this data gives the Bank of Canada the justification it needs to hold its key interest rate at the next meeting. The central bank had previously indicated that current rates were likely sufficient to stimulate the economy, and this report appears to support that stance.
"This reinforces our revised call that the Bank of Canada moves back to the sidelines next month, leaving rates unchanged after easing in September and October," wrote Desjardins economist Royce Mendes in a note to clients.
This sentiment is shared by others who see the data as a sign that the bank's previous rate adjustments are working as intended. Andrew Grantham, an economist at CIBC, noted that the report is "supportive of the Bank of Canada's thinking that interest rates are now low enough to stimulate the economy."
A Closer Look Reveals a Mixed Picture
While the headline numbers are strong, a deeper dive into the data reveals a more complex situation. The growth in October was not uniform, and some underlying indicators suggest continued softness in the market.
Part-Time Gains Mask Full-Time Losses
The entire net gain in employment came from part-time work, which saw an increase of 85,000 positions. In contrast, the number of full-time jobs actually declined by 18,500. This shift toward less stable employment is a concern for long-term economic health.
"While this report shows some resilience in Canada's labour market, it is not strength," commented TD economist Leslie Preston. "Overall job market conditions remain soft."
Wage Growth Continues
Despite the mixed employment details, wages showed healthy growth. The average hourly wage rose by 3.5 percent from a year earlier, reaching $37.06. This indicates that for those who are employed, purchasing power is increasing.
Sector and Regional Disparities
The job gains were concentrated in a few key areas. Ontario led the provinces, adding 55,000 jobs. Industries such as retail, transportation, and warehousing saw the most significant hiring.
Some economists suggest that temporary factors may have inflated these numbers. Douglas Porter of BMO pointed out that Ontario's gains in sectors like accommodation, food services, and recreation could have been boosted by the Toronto Blue Jays' extended playoff run.
Meanwhile, the construction sector shed 15,000 jobs, indicating weakness in a key part of the economy. Furthermore, total hours worked across the country dipped by 0.2 percent, partly due to labour disputes, including a teachers' strike in Alberta that affected nearly 87,000 workers.
Bright Spots for Private Sector and Youth
Amid the mixed details, there were several encouraging signs. Private-sector employment rose by 73,000, the first increase in this category since June. This suggests that businesses are regaining some confidence in hiring.
Another positive development was seen in the youth labour market. Employment for those aged 15 to 24 increased by 21,000, the first rise since January. This helped lower the youth unemployment rate by 0.6 percentage points to 14.1 percent.
However, Statistics Canada cautioned that conditions for young workers remain challenging. The youth employment rate of 54.2 percent is still well below the high of 59.6 percent recorded in March 2023, highlighting the long road to a full recovery for this demographic.
