Unemployment rate drops to 6.5 per cent in Canada as jobs data beat expectations

Posted by Admin October 11, 2024 Jobs

Consensus in the financial industry was that around 31,500 jobs would be added in Canada in September. (Photo by Creative Touch Imaging Ltd./NurPhoto via Getty Images) (NurPhoto via Getty Images)

Canada’s labour market defied expectations in September, adding a net 46,700 jobs, with the unemployment rate dropping to 6.5 per cent, according to Statistics Canada data released on Friday.

The 0.1 percentage point drop in unemployment was the first decline since January. Canada’s employment rate also dropped 0.1 percentage points in September because population growth still outpaced growth in jobs.

In a note following the data release, CIBC economist Katherine Judge wrote that the strong headline figures “masked some weaker details.”

Hours worked dropped 0.4 per cent, and weaker unemployment “was helped by a further decline in the participation rate,” Judge said. The participation rate, or the proportion of working-age people actively working or seeking work, fell 0.2 percentage points to 64.9 per cent in September. It was the third decline in four months.

“Overall, the mixed report isn’t enough to make a 50 basis point cut a sure thing in October,” Judge wrote, referring to the Bank of Canada’s (BoC) next interest rate decision. However, the tone of the BoC’s Business Outlook Survey, set for release later this morning, along with next week’s release of the Consumer Price Index for September “could still make that outcome possible if they look soft enough,” she wrote.

Consensus in the financial industry ahead of the announcement was that 31,500 jobs would be added in September, according to BMO Economics. BMO’s own call was for a more modest 20,000 jobs added.

Full-time employment had its largest gain since May 2022, Statistics Canada says, rising 0.7 per cent with 112,000 full time positions added in September. That was offset by a loss of 65,000 part-time jobs, a 1.7 per cent drop from the previous month.

The release of the notoriously volatile data followed an underwhelming August result in which a net 22,100 jobs were added, largely in part-time work. The unemployment rate rose 0.2 percentage points in August, to 6.6 per cent. Consensus prior to today’s announcement was for the unemployment rate to rise to 6.7 per cent.