Canada Unemployment Rate Steady at 6.5% in October -- Update

By Robb M. Stewart

OTTAWA--Muted job growth in Canada last month left the unemployment rate unchanged as softness in the labor market continues to build.

Canadian employers added 14,500 jobs in October, more than 12,000 fewer than the month before, Statistics Canada reported Friday.

The pace meant the jobless rate was steady at 6.5% after edging down 0.1 percentage point in September.

A lackluster job market suggests businesses have yet to respond to four successive interest rate cuts by the central bank since the middle of the year. Despite still hot population growth, signs of frustration among job seekers are showing, with both the employment and participation rates continuing to weaken.

Economists were expecting the addition of a modest 27,150 jobs and forecast the jobless rate would tick up to 6.6%. Still, when calculated using U.S. Labor Department methodology, Canada's unemployment rate rose to 5.6% from 5.4% the previous month.

Job openings have declined this year, falling below pre-pandemic levels, while the most recent business outlook survey by the Bank of Canada suggests hiring plans remained weak in the third quarter. At the same time, rapid immigration continues to swell the population.

Most analysts expect the jobless rate to peak in the coming months, then begin to slide some time next year with the help of further rate cuts aimed at spurring consumer spending and business investment.

In the U.S., job growth slowed sharply last month as workers were sidelined by hurricane effects and a strike at Boeing. The American economy added a seasonally adjusted 12,000 jobs for the month after a gain of 223,000 the month before, though the unemployment rate remained at a historically low 4.1%.

With little change in Canadian job numbers last month, the proportion of the working-age population who were employed slipped 0.1 percentage point to 60.6%, a sixth consecutive monthly fall. On an annual basis, the employment rate declined 1.3 percentage points to continue a downward trend from a peak in early 2023.

The labor force participation rate, the proportion of Canadians aged 15 and older with jobs or are looking for work, also inched down 0.1 point to 64.8%, a fourth decline since May.

Though steady in October, unemployment has been building in Canada, rising from 5% at the start of 2023, driven in large part by new immigrants and young workers. The jobless rate began 2023 at 5%.

The latest labor survey showed that for a second straight month jobs growth was concentrated in full-time work, which increased by 25,600 in October to counter a 11,200 drop in part-time roles.

Overall, the number of employees in the private sector was little changed following growth totaling almost 100,000 combined in August and September. Public-sector employment and the ranks of the self-employed also were virtually unchanged.

Bank of Canada Gov. Tiff Macklem has told lawmakers he expects the central bank to cut rates further to revive a soft economy. The bank last month reduced its benchmark interest rate by a half percentage point, building on three back-to-back quarter-point moves, though economists are divided over what size cut to expect from the next policy meeting after annual inflation decelerated to 1.6% in September.

Though annual inflation continues to cool in Canada, wage growth continues to exert price pressure. Average hourly wages for permanent employees rose 4.9% in October from a year earlier, accelerating from 4.5% growth the month before and topping the 4.5% advance economists anticipated.

Total hours worked rose 0.3% on-month, and were up 1.6% compared with a year earlier.

Write to Robb M. Stewart [e-mail]

(END) Dow Jones Newswires

11-08-24 0858ET