Unemployment also fell
Canada’s economy added more jobs than expected in September as the unemployment rate ticked lower, although its underlying performance was still soft enough to leave oversized rate cuts by the Bank of Canada on the table before the end of the year.
Statistics Canada said on Friday that the labour market tacked on a net 46,700 jobs last month, higher than consensus estimates of 31,500, while unemployment fell to 6.5% – marking the first time it’s dropped since January.
Full-time employment was up by 112,000, making up for a decline of 65,000 in part-time jobs – but Royal Bank of Canada (RBC) said the results still reflected a “mixed” economic outlook amid slowing wage growth and sluggish overall growth trends since the pandemic.
The bank’s assistant chief economist Nathan Janzen said in a note that it had expected consecutive 50-basis-point cuts by the Bank of Canada in its next two announcements – “and those moves would still make sense after today’s labour market data.”
The unemployment rate will likely jump further in the months ahead thanks to a sharp dip in hiring demand, he said, while gross domestic product (GDP) growth is set to remain well below the Bank of Canada’s July forecast.
Bank of Montreal (BMO) chief economist Doug Porter, meanwhile, also noted softness in the September figures and highlighted that the estimate of total hours worked – which ticked lower last month – “simply does not square” with the overall increase in full-time jobs.
Still, he said the “surprisingly sturdy” employment outlook and stronger-than-anticipated labour market growth opened the door to a quarter-point cut this month by the Bank of Canada, rather than an oversized reduction.
The Bank is scheduled to meet for its next decision on interest rates on October 23, with its final meeting of the year arriving on December 11.
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