The Canadian economy added jobs in September but did little to recoup the losses of the last three months while the jobless rate beat forecasts, edging down as fewer people looked for work, official data showed on Friday.
Canada added a net 21,100 jobs in September, in line with forecasts, though mostly in part-time work, Statistics Canada said. The jobless rate dropped to 5.2%, topping predictions it would remain at 5.4%.
The September employment gain ended a three-month streak of losses, though it barely dented the 113,500 net jobs lost in June through August. The drop in Canada’s unemployment rate came as fewer people searched for work, Statscan said.
“Given the declines of the previous three months, this is a pretty tepid rebound,” said Andrew Kelvin, chief Canada strategist at TD Securities.
“The unemployment rate falling – it looks like a good thing at face value, but a lot of that does reflect a lower participation rate.”
Canada’s labor force shrank by a net 20,300 in August, while the participation rate edged down to 64.7% from 64.8%.
Wage growth for permanent employees eased to 5.2% from 5.6% in August, but was above 5.0% for the fourth consecutive month.
“I think on balance, there are signs that labor markets are still strong, but softening,” said Nathan Janzen, senior economist at Royal Bank of Canada, adding it would not be enough for Canada’s central bank to change course.
“You would have really needed a big downside surprise in labor markets to really derail them from more aggressive interest rate hikes,” he said.
Bank of Canada Governor Tiff Macklem made clear on Thursday the central bank would not yet be pivoting away from its rapid pace of interest rate increases as it has yet to see core inflation ease.
Economists and money markets are leaning toward a 50-basis-point increase on Oct. 26. Canada’s central bank has lifted rates by 300 bps since March, one of its steepest and fastest tightening cycles ever.
The Canadian dollar was trading 0.3% higher at 1.3710 to the greenback, or 72.94 U.S. cents.
U.S. employers hired more people that expected in September, separate data showed on Friday, with that country’s unemployment rate dropping to 3.5% in September. Canada’s unemployment rate, if measured in U.S. terms, would be 4.1%, Statscan said.
The agency also provided new data on Canadians aged 55 to 64 who were not in the labor force, with 57.5% – or roughly 1 million – saying they were retired. There were 3.4 million Canadians aged 55 to 64 active in the labor force in September.
Canada is grappling with a mass exodus of its most highly skilled workers, as more people than ever are retiring.