Canada’s Unemployment Rate Holds at 7.1% Amid Surprise Job Gains

OTTAWA, Canada — Canada’s unemployment rate remained steady at 7.1% in September, according to Statistics Canada, which released the data on Friday. This figure is notably better than analysts’ expectations of a slight increase to 7.2%.

In terms of employment, Canada saw a net gain of 60,400 jobs during the month, which was a significant rise compared to the forecasted addition of 5,000 jobs. The increase, primarily observed in full-time employment, was marked by a rise of 106,000 full-time roles, while part-time employment saw a decrease of 46,000 positions.

Statistics Canada highlighted that the participation rate also saw an uptick, climbing to 65.2% from 65.1%. Meanwhile, wage inflation remained steady at an annual rate of 3.6%. Despite the positive job gains, the unemployment rate unchanged points to the challenges in the labor market.

The USD/CAD currency pair experienced bearish pressure following the report, with the Canadian dollar trading at 1.3985, down 0.28%.

Prior to the release of this data, expectations were mixed. Many economists predicted the unemployment rate would rise slightly due to earlier losses in job gains. The Bank of Canada (BoC), which cut its policy rate to 2.50% in September, may face challenges based on this report as they evaluate future monetary policies.

Skepticism remains among economists about the sustainability of this employment rebound. Analysts believe the job market still shows signs of excess slack, and the BoC may still need to consider additional rate cuts in the near future.

Bradley Saunders, a North America economist at Capital Economics, pointed out the broad-based employment growth in manufacturing, indicating resilience in that sector. However, the unchanged unemployment rate suggests ongoing struggles in the labor market.

The next major economic data release, including inflation figures set for October 21, will be critical for shaping the BoC’s policy decisions at their next meeting.