Canada’s Labour Market Surprises with Second Consecutive Month of Job Gains

Introduction to the Labour Market

Canada’s labour market has caught economists off guard with a second straight month of surprise job gains in October. The economy added 67,000 jobs in October, driving the unemployment rate down two tenths of a percentage point to 6.9 per cent. This growth was driven by part-time work, with 85,000 positions added, coming off solid gains in full-time work in September.

Job Growth by Sector

The private sector added 73,000 jobs for its first gain since June. The wholesale and retail trade sector saw the most growth, with 41,000 positions added in October, followed by transportation and warehousing with 30,000 jobs, and the information, culture, and recreation sector with 25,000 roles. Tariff-sensitive manufacturing posted a gain of 8,700 positions in October, while construction lost 15,000 jobs.

Provincial Job Growth

Ontario, a province hit hard by the trade war, led job growth provincially with 55,000 positions added. Manufacturing-heavy Windsor’s unemployment rate peaked at 11.2 per cent in June but has since trended down to 9.6 per cent, according to three-month moving averages. Young workers saw some relief in October after struggling for months in a tough labour market, as youth aged 15 to 24 saw 21,000 jobs added last month, the first gain since January.

Impact on Unemployment Rate

The youth jobless rate drove down 0.6 percentage points to 14.1 per cent in October after reaching a 15-year high in September, outside the pandemic. Average hourly wages were up 3.5 per cent annually in October, accelerating from 3.3 per cent the month before. However, wages have cooled from last year’s pace, and the unemployment rate remains elevated in a still-soft hiring environment.

Bank of Canada’s Interest Rate Decision

The Bank of Canada will be parsing labour data closely as it prepares for its final interest rate decision of the year on December 10. The bank’s benchmark interest rate stands at 2.25 per cent following a pair of consecutive cuts. Governor Tiff Macklem signalled last month that the central bank may be satisfied with where the benchmark interest rate stands unless incoming economic data strays from its forecasts.

Conclusion

In conclusion, Canada’s labour market has shown surprising resilience in the face of trade tensions and economic uncertainty. While the job market is not yet strong, the recent gains are a positive sign. The Bank of Canada is likely to keep interest rates steady, and the stimulative forces from previous rate cuts are expected to continue working their way through the economy. As the labour market continues to evolve, it will be important to monitor the data closely to understand the ongoing impact of trade tensions and economic trends on the Canadian economy.