Canada’s labor market posted its smallest job gain in more than a year and the unemployment rate rose to a 21-month high, adding to evidence that the country’s economy is weakening.
The country added 17,500 jobs in October, while the unemployment rate rose 0.2 percentage points to 5.7 per cent, the fourth monthly increase in the last six months, Statistics Canada reported Friday in Ottawa. The numbers fell short of expectations for a 25,000 job gain and a 5.6 percent unemployment rate in a Bloomberg survey of economists.
Pay growth for permanent employees slowed to 5 percent, missing expectations for a 5.2 percent increase, but still the fourth consecutive month of pay increases above 5 percent.
The data paints a clearer picture of a slowing Canadian economy, with job creation lagging behind labor force growth due to record population increases. It’s another sign that labor demand is cooling while supply is recovering quickly. Bank of Canada Governor Tiff Macklem expects the economy to reach a modest oversupply in the fourth quarter, which will help slow consumer price inflation.
Macklem and his officials paused their interest rate increases during two consecutive meetings in September and October, and during that period various data releases point to an economy that is slowing rapidly, despite persistent underlying price pressures. Authorities are counting on a weaker economy to help ease inflation in the coming months as they watch from the sidelines.
Earlier this week, preliminary industry-based data suggested that gross domestic product remained stable in September, pointing to a 0.1 percent annualized drop in output for the third quarter. This would follow a 0.2 percent contraction from April to June, according to spending-based data.
In October, total hours worked were unchanged month-over-month and increased 2.1 percent compared to a year ago. That also points to relatively weak momentum early in the fourth quarter, when economists surveyed by Bloomberg expect GDP to expand at an annualized pace of 0.1 percent.
This is the first of two employment reports ahead of the Bank of Canada’s next decision on December 6. Most economists expect Macklem to keep rates steady at 5 percent, a likely endpoint in this tightening cycle.
Canada is experiencing record population growth due to high levels of immigration. Since January, job growth has averaged 28,000 per month, while growth in the population ages 15 and older has averaged 81,000 per month.
The participation rate remained stable at 65.6 percent. The employment rate (the proportion of the working-age population that is employed) fell 0.1 percentage point to 61.9 percent in October, while the population aged 15 and older increased by 85,000, or 0.3 percent. hundred.
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The employment increase was led by increases in construction, information and recreation, and the healthcare sector. Wholesale and retail trade, manufacturing and real estate suffered the greatest losses.
Employment rose in Alberta, Saskatchewan, Nova Scotia and New Brunswick, but fell in Quebec and barely changed in the other provinces.
With the help of Chris Middleton.
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