Canada jobs report delivered an upside surprise in October, with employers adding 66,600 positions and the national jobless rate easing to 6.9%. The second consecutive monthly beat suggests a sturdier labor backdrop even as tariffs and trade frictions continue to weigh on broader economic activity.
Key Points
Statistics Canada’s labor force survey on Friday showed the economy outpacing forecasts from economists polled by Bloomberg, who had expected a modest loss of 5,000 jobs and an unemployment rate holding at 7.1%. Friday’s Canada jobs report extends September’s gain of 60,400 and helps reverse some of the softness seen earlier this year.
Markets reacted immediately. The Canadian dollar strengthened to the day’s high, trading around C$1.4070 per U.S. dollar as of 8:35 a.m. in Ottawa, up roughly 0.3%. Government bonds sold off across the curve, with the two‑year yield up about four basis points to 2.43% as traders recalibrated rate expectations.
The three‑month rolling average for employment gains came in at 20,500. Since January, Canada has added a net 164,500 jobs, according to the Canada jobs report.
Inside the Canada jobs report: where gains came from
October’s headline increase was driven by part‑time roles, a detail that underscores both the resilience and the evolving composition of hiring. By industry, the Canada jobs report pointed to strength in wholesale and retail trade, transportation and warehousing, information, culture and recreation, and utilities.
Construction was the biggest decliner in the month, aligning with anecdotal reports of softer project pipelines and tighter financing conditions. Still, the broader hiring picture was positive enough to pull the unemployment rate down for the first time since the summer.
Provincially, Ontario dominated the gains. The Canada jobs report showed employment in the province rising by 55,000, the first increase since June and a tentative sign that Canada’s largest labor market is regaining traction.
Younger workers saw meaningful improvements. The Canada jobs report recorded the youth unemployment rate falling 0.6 percentage points to 14.1%, its first decline since February. Participation also nudged higher to 65.3% nationally, and the employment rate—the share of the working‑age population that’s employed—rose to 60.8%.
Wage dynamics firmed. Average hourly wages for permanent employees increased 4.0% year over year, ahead of consensus projections for a 3.5% pace. That wage pickup, highlighted in the Canada jobs report, will be closely watched by policymakers monitoring underlying inflation pressures.
Total hours worked dipped 0.2% in October amid labor disputes, though they were up 0.7% from a year earlier. The pullback in hours, noted in the Canada jobs report, tempers the otherwise strong headline and will feed into productivity and GDP tracking estimates for the fourth quarter.
How does this fit into 2025’s labor trend?
Taken together, September and October delivered two solid prints that contrast with the more uneven performance earlier in the year. Trade tensions with the United States and related tariffs have curbed output in some sectors, particularly manufacturing and construction. Yet consumer‑facing industries and services tied to logistics and recreation posted gains, helping stabilize overall employment.
Compared with prior months, the composition of jobs—skewed toward part‑time—suggests employers remain cautious as they navigate slower global growth. Even so, the back‑to‑back gains have lifted sentiment and reduced the risk that labor market weakness drags more heavily on household spending heading into the holiday season.
Bank of Canada watch: policy implications
For monetary policymakers, timing matters. October’s report arrives after the Bank of Canada delivered a second consecutive 25‑basis‑point rate cut last month, bringing the policy rate to 2.25%. Governor Tiff Macklem previously downplayed the significance of September’s surprise, saying the policy rate is “about the right level” and cautioning that monetary policy can only do so much to offset tariff‑related headwinds.
Even if officials refrain from overreacting to month‑to‑month volatility, two successive upside surprises will likely draw attention inside the central bank. Wage growth at 4.0% for permanent employees, alongside a lower unemployment rate, nudges the balance of risks away from deeper cuts—particularly if inflation remains sticky. At the same time, softer total hours worked and ongoing trade frictions argue for patience.
In short, the Canada jobs report gives the Bank of Canada a little more breathing room to hold policy steady while it assesses how the economy adapts to what officials have called a structural transition expected to last through 2027.
Regional and sector snapshots
- Ontario: The Canada jobs report showed a 55,000 increase, breaking a stretch of flat readings since June and reinforcing the province’s role as the main driver of October’s national gain.
- Construction: Notably weaker, consistent with tighter credit conditions and some project delays. This was the largest source of job losses last month.
- Trade, transportation, and recreation: The report cited notable hiring in wholesale and retail trade and in transportation and warehousing sectors linked to supply chains and consumer demand. Information, culture, and recreation also added jobs, signaling steady demand for services.
- Utilities: Posted gains, albeit from a smaller employment base, adding to the month’s breadth.
- Youth labor: The youth unemployment rate fell to 14.1%, a welcome reversal after months of difficulty finding work.
Markets and investor takeaways
Friday’s Canada jobs report spurred a brisk market response. The loonie firmed roughly 0.3% versus the U.S. dollar, reflecting improved sentiment on domestic growth. Short‑dated government bonds led losses as yields rose, with the two‑year at 2.43%, a move consistent with reduced odds of near‑term easing.
Equity investors typically parse labor data for signals on consumer spending and rate trajectories. Stronger employment and wages can support retail and services earnings, while the drag in construction may weigh on select industrials and materials names. For fixed‑income investors, the combination of a lower jobless rate and firmer wages warrants close attention to upcoming inflation releases, which could either validate or challenge the bond market’s repricing.
What analysts are watching next
- Durability of gains: Whether the momentum in part‑time hiring converts into full‑time positions in the coming months.
- Wages vs. inflation: If 4.0% wage growth persists while inflation moderates, real incomes could improve, bolstering consumption.
- Hours worked: A rebound from October’s 0.2% monthly decline would confirm that labor disputes were the main drag, not weakening demand.
- Sector rotation: Whether weakness in construction stabilizes, and if service‑sector strength continues into the holiday period.
- Data cadence: The next CPI and GDP prints will help determine how much of the Canada jobs report strength translates into broader output.
The bottom line
The Canada jobs report delivered another unexpected lift, adding 66,600 positions in October and nudging the unemployment rate down to 6.9%. With markets firming and wages running at 4.0% year over year, the print will be hard for policymakers to ignore—even as they stress patience amid a slower‑growing, trade‑challenged economy.
For households and businesses, the message is cautiously optimistic: hiring continues, wage gains have picked up, and participation is improving. For the Bank of Canada, the path forward likely involves watching the next round of inflation and growth data to judge whether this momentum is temporary or the beginning of a steadier trend.
FAQ’s
Article Source: Bloomberg
