Canada
fell to 6.9 percent in October, down 0.2 percentage points from the month earlier, as the economy added 67,000 jobs, mostly focused on part-time work.
Statistics Canada said Friday the growth was driven by job creation in wholesale and retail trade, transportation and warehousing, information, culture and recreation, and utilities. Youth unemployment (among people aged 15 to 24) also fell for the first time since February, falling 0.6 percentage points to 14.1 percent.
Here's what economists are saying about the latest jobs data and what it means for the economy.
future interest rate decisions.
“Unexpected momentum”: Capital Economics
October employment growth was “much stronger than we or the consensus expected and follows an equally strong September period that was also well above consensus expectations,” Alexandra Brown, North America economist at Capital Economics Ltd., said in a note.
Brown noted that the growth was “entirely driven by the private sector” and industries “most exposed to trade,” including wholesale and retail trade, transportation and warehousing, and manufacturing.
“This provides some confidence that activity in these sectors is beginning to recover, presumably in part because the average tariff rate on Canadian exports to the U.S. is still relatively low at around five percent,” she said.
Brown also said job growth in the information, cultural and recreation sectors could be attributed to “both the unseasonably warm weather and
run to the World Series.”
Hours worked fell 0.2 per cent in October, which Brown said “largely reflects labor disputes,” including the Alberta teachers' strike. While the employment increase was driven by part-time jobs, Brown said “we won't put too much weight on it” because it canceled out an “unusually large” gain of 106,000 full-time positions in September.
“The unexpected rise in employment and fall in the unemployment rate in October reinforce the Bank of Canada's view that it should now stay on the sidelines and await greater clarity on the impact of tariffs on the economy and inflation,” Brown said.
Resilience, but not strength: TD Economics
While “robust job growth” over the past two months proves Canada's labor market is more “resilient to trade tensions” than expected, the October data “is not overwhelming,” said Leslie Preston, managing director and senior economist at TD Economics.
Preston said that while labor force growth has “slowed sharply” this year, it is still outpacing job creation; she noted that the unemployment rate is still higher than the 6.6 percent level recorded in January.
“When we zoom out, we see that
“Even with tougher immigration policies cutting into labor force growth, the unemployment rate has risen and wage pressures have eased compared with a year earlier.”
Preston said the latest data will allow the Bank of Canada to “sit more comfortably on the sidelines” and allow rate cuts from the latest easing cycle to “ripple through the economy.”
“The Bank expects that easing inflation pressures due to the weak domestic economy will counter inflationary pressures from
and restructuring global supply chains,” Preston said.
While gains in September and October offset losses in July and August, Preston said “overall labor market conditions remain soft.”
“While this report shows some resilience in Canada's labor market, it is not a strength,” she said.
Volatility Survey: Scotiabank Economics
“Canada created fairly low-quality jobs, lowered the unemployment rate, and saw sharp increases in wages and temporary reductions in working hours,” Derek Holt, vice president and head of capital markets economics at the Bank of Nova Scotia, said in a note.
Holt said these factors “confirm” the Bank of Canada's “clear signal of pausing” in its easing cycle and “the Prime Minister Mark Carney administration's resistance to ramping up cyclical stimulus” – at least for now.
“While this is a spinning wheel for a volatile survey, we cannot ignore two months of strong growth with any more statistical confidence than we could dismiss a brief summer period of mild growth as mere statistical noise,” Holt said.
He said that an increase of 85,000 in part-time jobs led to overall growth while the number of full-time jobs fell by 19,000 was “not a very good signal.” He also noted that the industries driving job growth tend to lack “relatively high-paying jobs” and rely more on part-time workers than other sectors.
Wage growth “super-accelerated” by 9.6% month-on-month and year-over-year, which Holt noted was the “strongest increase” since June 2022.
“Continue to expect strong… wage growth as the one-third of Canada's workforce, which is governed by expiring collective bargaining agreements, continues to reset wage increases higher to offset what they agreed to on average about four years ago. Payroll data is unfortunately again behind July,” Holt said.
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