The unemployment rate dropped to 6.5% as full-time employment surged, surprising economists
The Canadian labour market showed stronger-than-expected performance in September, according to BNN Bloomberg.
Statistics Canada reported that the economy added 47,000 jobs, reducing the unemployment rate to 6.5 percent, the first decline since January. This follows four months of minimal change, with youth and women aged 25 to 54 driving the employment gains.
Leslie Preston, managing director and senior economist at TD, called the report a break in the cooling trend but cautioned about the volatility of monthly reports.
Economists polled by Reuters had predicted 27,000 jobs would be added in September and expected the unemployment rate to rise to 6.7 percent.
The job market’s resilience defied expectations, according to BMO chief economist Douglas Porter, who noted that full-time employment also saw its largest increase since May 2022.
Despite the positive data, economists maintained their expectations that the Bank of Canada would continue cutting its benchmark interest rate, currently at 4.25 percent. Preston explained that a larger-than-usual cut might occur only with a significant worsening of Canada's economic outlook.
The central bank's next decision on rates will be on October 23. In contrast, RBC assistant chief economist Nathan Janzen predicted a half-percentage-point cut in October and another in December.
Although job gains were significant, the employment rate fell in September due to Canada’s growing population. Since peaking at 62.4 percent earlier this year, the rate has trended downward as population growth has outpaced employment gains.
Statistics Canada reported that year-over-year employment rose 1.5 percent, while the population aged 15 and older increased by 3.6 percent.
Porter highlighted some soft areas in the report, such as a drop in total hours worked and a lower participation rate. All employment gains in September were in the service sectors, with the information, culture, and recreation industry seeing a 2.6 percent increase.
The wholesale and retail trade industry posted its first gain since January at 0.8 percent, and professional, scientific, and technical services employment rose 1.1 percent.
Average hourly wages increased 4.6 percent year-over-year, reaching $35.59, slightly down from the five percent rise in August.
Statistics Canada also revealed that the unemployment rate among Black and South Asian Canadians between 25 and 54 rose year-over-year in September.
Black Canadians in that age group saw their unemployment rate increase to 11 percent, while for South Asian Canadians, it reached 7.3 percent. For non-racialized, non-Indigenous people, the rate was 4.4 percent.
