Unexpected growth driven by retail, transport, and recreation
Canada’s economy added 67,000 jobs in October, according to Statistics Canada, defying expectations and pushing the unemployment rate down to 6.9%. Analysts had not predicted such a strong result, especially as most new roles were part-time. Still, economists note that this doesn’t detract from the positive surprise.
Wholesale and retail trade led the gains with 41,000 new positions, followed by increases in transportation, warehousing, information, culture, recreation, and utilities. On the other hand, the construction sector lost 15,000 jobs. Goods-producing sectors as a whole have declined since January, while services have added 142,000 jobs year-to-date.
Private sector employment increased by 73,000 positions in October, while public sector jobs remained flat.
Unemployment dips but concerns remain
The jobless rate’s decline from 7.1% to 6.9% marked one of the steepest monthly drops outside of pandemic recovery periods. Nearly 20% of those unemployed in September found work in October.
Youth unemployment also improved for the first time since February, with gains among workers aged 15 to 24. However, TD economist Andrew Hencic cautioned that the labor market remains weak in breadth, with job creation concentrated in a few industries.
“The rate is still higher than ideal,” he said, adding that labor conditions suggest an economy still struggling for momentum.
One-off effects and no rate cuts expected
Some unusual events influenced the October data. A teachers’ strike in Alberta reduced work hours, while Ontario saw gains in jobs likely related to the Toronto Blue Jays’ playoff run, especially in food, accommodation, and entertainment sectors.
Average hourly wages grew 3.5% compared to October 2024, rising to $37.06. This wage strength, along with falling unemployment, supports the view that the Bank of Canada will keep rates unchanged in December.
BMO’s Douglas Porter wrote that wage firmness and the sub-7% unemployment rate align with the central bank’s stance that rates are sufficiently low. CIBC’s Andrew Grantham echoed that sentiment, saying further rate cuts are unlikely for now.
