The Canadian economy saw a surprising increase of 67,000 jobs in October, leading to a decline in the unemployment rate to 6.9%, surpassing economists’ predictions. While most of the newly added jobs were part-time positions, this did not diminish the overall positive outcome, according to CIBC senior economist Andrew Grantham.
Both full-time and part-time employment showed year-over-year growth. The rise in job opportunities was notably driven by sectors such as wholesale and retail trade, transportation and warehousing, information, culture, recreation, and utilities. However, the construction industry experienced a loss of 15,000 jobs. Data revealed a decline in goods-producing sectors like construction and manufacturing from January to October, while service-producing industries saw an increase of 142,000 jobs during the same period.
In October, private sector employment rose by 73,000, while public sector employment remained unchanged. The drop in the unemployment rate from 7.1% to 6.9% marked a significant decrease, with almost one in five unemployed individuals finding employment. Chief economist at BMO, Douglas Porter, noted that this decline was one of the largest recorded, apart from the pandemic.
Even though the youth unemployment rate decreased for the first time since February, the overall unemployment rate is still considered high, as pointed out by TD Bank senior economist Andrew Hencic. He emphasized that the recent employment gains were concentrated in specific industries, leading to a somewhat elevated unemployment rate.
Despite the positive trends, economists do not anticipate a rate cut next month. Various factors influenced the October data, including a teachers’ strike in Alberta and the impact of the Toronto Blue Jays’ World Series run. Average hourly wages also saw a 3.5% increase, reaching $37.06 per hour compared to the previous year.
In light of these developments, economists believe that the Bank of Canada is unlikely to implement further rate cuts. Grantham suggested that the current data aligns with the Bank of Canada’s stance on interest rates, indicating no immediate need for additional cuts. Porter and Hencic also agreed that the recent economic indicators are unlikely to prompt any immediate changes in monetary policy.