Canada added 47,000 new jobs in September, lowering its unemployment rate for the first time since the beginning of the year to 6.5%, according to the latest report from Statistics Canada released on Friday.
This job growth, following months of stagnation, exceeded analysts’ expectations.
All the new positions were full-time and in the private sector, although total hours worked declined once again, and wage growth showed signs of slowing.
TD Bank senior economist Leslie Preston remarked in a research note, “A decrease in Canada’s unemployment rate is positive news, but September’s report doesn’t alter the fact that the labor market has significantly cooled since the Bank of Canada began raising interest rates.”
The central bank, which had aggressively increased rates starting in March 2022 to tackle inflation, has recently shifted its approach as inflation has started to ease.
Analysts are still predicting a rate cut at the Bank of Canada’s next meeting on October 23, following three consecutive reductions since June that brought the key lending rate down to 4.25%. However, there is variation in the projected extent of the cut.
Desjardins’ economist Royce Mendes said, “A strong rise in jobs doesn’t change our view that the central bank will lower rates by 50 basis points later this month,” while others, including Preston, suggested a more moderate 25 basis point cut is likely, consistent with previous reductions from June to September.
Employment in September increased across several sectors, including information, culture and recreation, wholesale and retail trade, and professional, scientific, and technical services. Private sector employment grew for the second consecutive month, while public sector jobs declined.
Full-time employment saw its largest rise since May 2022, although part-time employment fell. Average hourly wages rose by 4.6%, but total hours worked dropped by 0.4% during the month.
