Canada’s labour market caught economists off guard with a second straight month of surprise job gains in October.
Statistics Canada said Friday the economy added 67,000 jobs in October, good enough to drive the unemployment rate down two tenths of a percentage point to 6.9 per cent.
October’s growth was driven by part-time work with 85,000 positions added, coming off solid gains in full-time work in September. The private sector meanwhile added 73,000 jobs for its first gain since June.
Economists polled by Reuters ahead of Friday’s release expected Canada’s labour market would take a breather with a loss of 2,500 jobs in October, following a surprise gain of 60,000 positions in September.
Job gains across October and September now more than offset sharp drops observed in August and July.
TD Bank senior economist Leslie Preston leaned on baseball metaphors in a note to clients Friday, calling the back-to-back monthly job gains a "double."
"The labour market is proving a bit more resilient to trade tensions than we had expected, but October's data is not a home run," Preston said.
The wholesale and retail trade sector saw the most growth with 41,000 positions added in October, followed by transportation and warehousing with 30,000 jobs and the information, culture and recreation sector with 25,000 roles.
Tariff-sensitive manufacturing posted a gain of 8,700 positions in October while construction lost 15,000 jobs.
StatCan said goods-producing industries have shed 54,000 positions on net since January – when uncertainty surrounding U.S. tariffs and global trade started to ramp up – while the services side of the economy had added 142,000 jobs over that time.
Ontario, a province hit hard by the trade war, led job growth provincially with 55,000 positions added. Manufacturing-heavy Windsor’s unemployment rate peaked at 11.2 per cent in June but has since trended down to 9.6 per cent, according to three-month moving averages.
Young workers saw some relief in October after struggling for months in a tough labour market as youth aged 15 to 24 saw 21,000 jobs added last month, the first gain since January.
That drove the youth jobless rate down 0.6 percentage points to 14.1 per cent in October after reaching a 15-year high in September, outside the pandemic.
Average hourly wages were up 3.5 per cent annually in October, accelerating from 3.3 per cent the month before.
While wages heated up on a monthly basis, Preston noted pay hikes have cooled from last year's pace and the unemployment rate remains elevated in a still-soft hiring environment.
"While this report shows some resilience in Canada's labour market, it is not strength," she said.
The Bank of Canada will be parsing labour data closely as it prepares for its final interest rate decision of the year on Dec. 10, though the central bank will also get a look at November’s jobs figures before making that call.
The bank’s benchmark interest rate stands at 2.25 per cent following a pair of consecutive cuts.
Governor Tiff Macklem signalled last month that the central bank may be satisfied with where the benchmark interest rate stands unless incoming economic data strays from its forecasts.
"Overall, today's data is supportive of the Bank of Canada's thinking that interest rates are now low enough to stimulate the economy, and we continue to forecast no more rate cuts from here," said CIBC senior economist Andrew Grantham in a note.
Preston agreed that October's job figures should give comfort to the Bank of Canada that it can sit on the sidelines while the stimulative forces from previous rate cuts work their way through the economy.
Picture Courtesy: THE CANADIAN PRESS/Christinne Muschi
