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Canada’s unemployment rate remained unchanged in October at 6.5 per cent, with the economy adding 15,000 jobs, Statistics Canada said on Friday, which has many economists split on whether the Bank of Canada will cut by 25 or 50 basis points at its next policy meeting in December.
The job gains were about half the consensus expectation of 27,000 new positions. Unemployment was up 0.8 percentage points compared to the same time last year, with 193,000 more people looking for jobs or temporarily laid off.
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The participation rate declined to 64.8 per cent in October, marking the fourth monthly decline since May and hitting its lowest point since December of 1997, excluding the pandemic years.
Douglas Porter, chief economist at the Bank of Montreal, said the labour report could leave the Bank of Canada wondering about whether to make a cut of 25 or 50 basis points at its next policy rate decision in December.
“This so-so result doesn’t really turn the dial on the Bank of Canada’s cut-o-meter, with the market still leaning slightly to a follow-up 50-basis-point reduction in December,” he said in a note. “We would suggest that with the Canadian dollar on its heels, signs that the Canadian housing market is stirring again, and the U.S. economy still chugging along, the (Bank of Canada) may well turn a bit more cautious on the rate-cut front.”
Andrew Grantham, senior economist at CIBC Capital Markets, pointed out there will be more data between now and the central bank’s next decision to help policymakers determine the steepness of the cut.
“With one more employment report before the Bank of Canada’s next interest rate decision, today’s release was never going to close the book on the 25- versus 50-basis-point cut debate,” he said in a note to clients. “The mixed nature of today’s data didn’t help, but we continue to lean towards another 50-basis-point move.”
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Hiring demand has slowed, with employment in the private sector and the public sector unchanged in October. Employment in business, building and support services rose by 4.2 per cent. Statistics Canada said there were declines in public administration and in finance, insurance and real estate, but those industries are still up on a year-over-year basis.
“Hiring demand has continued to slow with job openings falling and we continue to think the most likely near-term path for the unemployment rate is higher rather than lower,” Nathan Janzen, assistant chief economist at the Royal Bank of Canada, said in a note to clients.
Notably, the youth unemployment rate declined again in October to 12.8 per cent, down from its recent peak of 14.5 per cent in August. The youth employment rate rose to 54.4 per cent, its first increase since April.
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Wage growth accelerated in October, with average hourly wages increasing on a year-over-year basis by 4.9 per cent, following a 4.6 per cent gain in September.
• Email: jgowling@postmedia.com
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