Canada’s labour market bucked its weakening trend in September, adding 47k new jobs. Adding to the good news, the gains were entirely full-time (+112k), and in the private sector (+61k). Meanwhile part-time positions gave back their August gains (-65k).
Job gains were strong enough to push the unemployment rate down a tenth to 6.5%, the first improvement since January. Labour force growth was modest in September (+16k), as the participation rate fell two tenths to 64.9%.
Looking across sectors, job gains were concentrated in information, culture and recreation (+22k, 2.6%), wholesale and retail trade (+22k, 0.8%) and professional, scientific and technical services (+21k, 1.1%).
The unemployment rate ticked down in September, driven entirely by youth. The unemployment rate for those aged 15-24 fell a full percentage point to 13.5%, but is still 2.8 percentage points higher than a year ago. Perhaps more telling is that the share of the core working age population (25-54 years) with a job continued to tick down. It has fallen 1.6 percentage points relative to the start of 2023.
In one gray cloud in the report, total hours worked fell again in September (-0.4% month-on-month), and are up 1.2% over the past year. Wage growth cooled to 4.6% year-on-year in September.
Key Implications
A move down in Canada’s unemployment rate is good news, and the two year bond yield is up a few tenths on the news. However, September’s jobs report does not change the picture of a labour market that has cooled notably since the Bank of Canada started raising interest rates. Data rarely moves in a straight line, and we would need to see a few more months of strength before we declare an improving trend.
The Bank of Canada’s next interest rate decision is in less than two weeks, and another cut is widely expected. Some market participants are leaning towards a larger half point move after the Fed’s larger cut, but September’s job data will likely pare those bets back a bit. We look for another quarter-point interest rate cut on October 23rd.
