State of unemployment could play a role in the BoC's next decision
Employment ticked up by 0.2 per cent in September, as the Canadian economy added 47,000 jobs. Both the employment rate and the unemployment rate fell by 0.1 per cent to 60.7 per cent and 6.5 per cent respectively.
Ontario led job creation with 43,000 new jobs, followed by Quebec with 22,000 jobs. British Columbia shed around 18,000 jobs, according to Statistics Canada.
Average hourly wages showed a year-over-year increase of 4.6 per cent in September, following growth of 5.0 per cent in August.
“Canadian September jobs data was reported this morning and surprised positively on a headline basis,” said Geoff Phipps, trading strategist and portfolio manager at Picton Mahoney Asset Management. “Note that the participation rate dropped 20 bps to 64.9%, continuing the downward trend since late 2023. This trims some of the potential enthusiasm from today's jobs data. Further, the pace of average hourly wage growth declined to 4.5% year over year from 4.9% the month prior.”
The number of private sector employees increased for the second consecutive month in September. The 0.5 per cent rise brings year-over-year private sector job growth to 1.5 per cent, according to StatsCan. Public sector employment, fell by 0.5 per cent in September, but remains up 3.0 per cent year-over-year.
Full time employment saw the largest gain since May of 2022, with 112,000 full time employment jobs added. This was offset somewhat by the loss of 65,000 part time jobs. Phipps weighed in on what this report may mean for the Bank of Canada’s ongoing interest rate cutting cycle.
“This report has the potential to allay concerns that the BoC is behind the curve in its rate-cutting cycle, with today's data being the last jobs release before the next rate decision on October 23rd,” Phipps says. “Over the last several weeks, the chorus of economists calling for a 50 bps cut in October has grown given a steady deterioration in data until this print. The odds of a 50 bps cut was repriced this morning from about a coin flip to about a 1 in 4 chance of 50 bps.”
