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Canada’s job market partially recovered in September, with employment rising by 60,000 after steep declines in July and August. The unemployment rate held steady at 7.1%, while the employment rate ticked up to 60.6%.
Full-time jobs surged (+106,000) and gains were led by core-aged workers, especially women. Sectors driving growth included manufacturing, health care and agriculture, though retail and wholesale trade shed jobs. Regionally, Alberta stood out with a gain of 43,000 positions, helping to offset earlier losses.
Wage growth for permanent employees remained solid at 3.3% year over year, continuing to hover above 3%, a potential concern for inflation.
What it means for the Bank of Canada
September’s job rebound has complicated the outlook for the Bank of Canada, offering just enough strength to challenge expectations for another near-term cut while still leaving signs of slack that argue for more easing down the road.
The stronger numbers, said TD’s Andrew Hencic, "could change the calculus” for the October decision, though inflation remains within target and the 7.1% jobless rate suggests slack is still present. With CPI due Oct. 21, he argued it will take a bigger downside surprise to tilt the Bank toward another cut—something markets picked up on, as bets on easing faded after the release.
Others saw the rebound as a welcome breather, with BMO’s Douglas Porter describing the gains as "certainly welcome after the big declines in the prior two months.” He added that Canada’s economy appears to be "treading water” as it waits for clarity on trade. He suggested that with the summer’s weakness no longer front and centre, the Bank is more likely to pause unless inflation slows materially.
There was also a more dovish read, with CIBC’s Andrew Grantham cautioning that the headline strength masks weak three- and six-month averages alongside an elevated unemployment rate. He argued the economy "still isn’t strong enough to reduce” existing slack, and said CIBC continues to expect another cut later in October—so long as the CPI report supports that view.
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