The Canadian labour market added 63.8k positions in September, with full-time employment up 15.8k and part-time employment up 47.9k.
The unemployment rate was unchanged at 5.5% and the participation rate rose 0.1 percentage point to 65.6%.
Employment by sector showed gains in educational services (+66k), and transportation and warehousing (+19k). Job losses were seen in finance, insurance, real estate, rental and leasing (-20k), construction (-18k), and information, culture and recreation (-12k).
Lastly, total hours worked were down 0.2% month-on-month and wages were up 5.0% year-on-year (unchanged compared to August).
Key Implications
The Canadian jobs market has surprised to the upside once again. Today’s headline print was double the trend pace over 2023, boosted by Canada’s continued population boom (+82k m/m in population) and a surge of workers entering the job market (+72k m/m). 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. And when looking at cyclically driven private sector firms, hiring only increased by 1k this month. 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.
The Bank of Canada has been looking for evidence that past rate hikes are starting to bite. Today’s employment report muddies the outlook. Financial markets are cementing pricing for another 25bps rate hike in the coming months, causing the Canada 2-year yield to surge over 15bps this morning. There will be a lot more data coming out between now and the next BoC rate decision (CPI, housing, retail sales) and the Bank will likely need to see significant weakness in these reports to prevent it from pulling the trigger on another hike.
