In October, the jobs market saw its first significant increase in four months
The latest employment market results add further fuel to the Bank of Canada’s rate-hike strategy, according to several economists.
The Canadian labour sector saw the addition of 108,000 new jobs in October, the first significant increase after four months of declines or minimal changes.
“This increase – widespread across industries, including manufacturing, construction, and accommodation and food services – brought employment back to a level on par with the most recent peak observed in May 2022,” said economist Sherry Cooper.
The unemployment rate stood at 5.2%, just slightly above the record low of 4.9%.
“[The latest] labour force data in Canada throws into question the widespread assumption that the Bank of Canada can ease off the brakes very soon,” Cooper said. “I believe Governor Tiff Macklem will hike rates by another 50 bps in December and continue with 25-bp increases early next year.”
Cooper predicted a peak of 4.5% for the BoC policy rate.
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Nathan Janzen, assistant chief economist at RBC Economics, said that the October gain essentially “fully retraced” the decline of 113,000 jobs seen from June to August of this year.
“There is little evidence of weakness in the October data,” Janzen said. “Early signs of softening in the labour market were part of the reason the Bank of Canada opted for a smaller (but still large) 50-bp hike to the overnight interest rate in October, signalling that the current rate hiking cycle could be in its late stages.”
Janzen stressed that while inflation figures will remain the main driver of the BoC’s next rate adjustments, “the rebound in labour markets in October will also add pressure to push interest rates higher.”
