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Canada’s labor market slipped after two straight months of strength, with both employment and the jobless rate little changed, indicating the nation’s recent pace of job growth may be cooling.
The country lost 1,800 jobs in October, Statistics Canada said Friday in Ottawa, versus economist expectations for a 15,000 uptick in employment. October marks the first month of job losses since July and comes after Canada added almost 135,000 jobs in the prior two months. Full-time positions fell by 16,100, while part-time increased 14,300. The unemployment rate held steady at 5.5%, matching the median forecast, and wage gains accelerated.
The Canadian dollar dropped on the report, falling 0.4% to C$1.3224 per U.S. dollar at 8:46 a.m. in Toronto trading. Yields on Canadian two-year bonds were down three basis points to 1.60%.
Key Insights
- The flat reading for employment in October doesn’t shift the view of a labor market that remains a bright spot for the Canadian economy despite concerns that trade tensions are slowing growth.
- The question now is whether the month’s drop in employment is a blip or if it’s a sign of future weakness. The latter could pressure the Bank of Canada into cutting interest rates, something they opened the door to in October’s meeting
- Wage gains for permanent employees quickened to 4.4% on the year, a sign that tightness in the labor market is boosting pay. Hours worked advanced 1.3% from a year earlier, matching last month’s pace.
- “It’s hard to be too upset over one soft print,” said Rob Both, a macro strategist at Toronto-Dominion Bank. “It doesn’t change anything for the Bank of Canada.”
- Private sector employment was virtually unchanged, while self-employment plunged by 27,800. Public sector employment helped offset most of the losses, adding 28,700 jobs. Election-related hiring contributed to the gains in the public sector.
- Even with the slight drop in October, job gains so far this year have been robust. The country has added 356,300 jobs, the most in the first 10 months of a year since 2002.
- The construction and manufacturing sectors dragged on employment, losing a total of 44,000 jobs while public administration and finance, insurance and real estate sectors rose notably
