Canadian economy added 64,000 jobs in September
The Canadian economy added a more-than-expected 64,000 jobs in September while the unemployment rate held steady, according to data released this morning from Statistics Canada.
The employment gains consisted of an increase of 47.9k part-time positions and 15.8k full-time jobs. The unemployment rate was unchanged at 5.5%, despite expectations that it would tick up.
The Canadian economy has now added a total of 97,000 new positions in the third quarter.
The largest gains in September were seen in educational services (+66k), which Statistics Canada noted can be volatile, particularly at the start of the school year. Job losses were concentrated in finance, insurance, real estate, rental and leasing, with 20k fewer positions in the month, a decline of 1.4%.
Regionally, employment increases were led by Quebec (+39k) and British Columbia (+26k), while Alberta saw a decline of 38k.
StatCan also reported a 5% year-over-year rise in average hourly wages, to $34.01, following a 4.9% rise in August.
“While the headline figures will be grabbing most of the attention, we'd caution on getting too excited. Almost all the gains were in the historically volatile Education sector,” noted James Orlando of TD Economics. “Furthermore, most of the job gains were in part-time employment, causing the number of hours worked to decline. These details should throw some cold water on a seemingly hot jobs report.”
What this means for the Bank of Canada
Orlando went on to say that the September report “muddies the outlook” for the Bank of Canada, which has been looking for evidence that its rate hikes are working to slow the economy.
Financial markets have upped the odds of another quarter-point rate hike at the Bank’s next monetary policy meeting this month.
But economists say it’s too soon to be sure, particularly with more key data to be released prior to the meeting, including the September inflation report.
“There are still signs that hiring demand continues to soften under the surface relative to surging labour supply, with broader unemployment measures pointing to more softening than the official unemployment rate itself implies,” noted Nathan Janzen of RBC Economics.
“Still, it would be difficult for the Bank of Canada to look through very strong top-line employment growth, and wages are showing few signs of decelerating despite signs that labour supply is beginning to catch up to hiring demand,” he added.
While RBC’s official forecast is for a rate hold this month, Janzen acknowledged that the Bank of Canada “has been clear that it won't hesitate to respond with more hikes if necessary to cool labour markets and bring inflation down.”
October employment data will be released on November 3, 2023.
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