Canadian economy lost 1,800 jobs in October, unemployment rate steady – CTV News

Canadian economy lost 1,800 jobs in October, unemployment rate steady - CTV News
Canada unexpectedly loses 1,800 jobs, widely missing forecasts
OTTAWA — The number of people working in Canada edged lower in October following two months of big gains as the manufacturing and construction sectors lost jobs.

Statistics Canada said Friday the economy lost 1,800 jobs in October, following gains of 54,000 jobs in September and 81,000 in August.

The number of full-time jobs fell by 16,100, offset in part by a gain of 14,300 part-time jobs, while the unemployment rate held steady at 5.5 per cent.

Economists on average expected the economy to add a total of 15,900 jobs and an unemployment rate of 5.5 per cent, according to financial markets data firm Refinitiv.

Scotiabank deputy chief economist Brett House said the October jobs numbers were the weakest since July, but added that one soft month wont have much impact on the Bank of Canadas stance, particularly after the strong gains in the two months that preceded it.

"But we continued to see strong wage gains, at over twice headline inflation, which reflects the fact that Canadian businesses continue to cite labour shortages as the most important constraint on their growth."

Despite the small decline in the number of jobs, wage growth in October held steady. Average hourly wage growth, year-over-year, for all employees was 4.3 per cent for the month, the same as September.

The manufacturing sector lost 23,000 jobs, mostly in Ontario, while the construction sector lost 21,000. Employment in the "other services" industry also fell by 18,000.

The losses were offset in part by an increase of 20,000 jobs working in public administration and 18,000 in finance, insurance, real estate, rental and leasing.

The jobs report comes after the Bank of Canadas decision late last month to keep its key interest rate on hold at 1.75 per cent.

In making its decision, the central bank said inflation was on target and the domestic economy has held up well in many respects, even though its feeling the negative effects of slowing global growth.

Josh Nye, senior economist at Royal Bank, said the future direction of the Bank of Canada will depend on the resilience of the Canadian economy, particularly in consumer spending and housing.

"A healthy labour market is key to both and there is little sign of deterioration in todays report with the unemployment rate remaining low and wage growth continuing at a strong pace," Nye said.

The number of self-employed workers in October fell by 27,800, while public sector employees rose by 28,700. The number of private sector employees fell by 2,700.

Statistics Canada also released seasonally adjusted, three-month moving average unemployment rates for major cities. It cautions, however, that the figures may fluctuate widely because they are based on small statistical samples. Here are the jobless rates last month by city (numbers from the previous month in brackets):

Signage marks the Statistics Canada offices in Ottawa on Wednesday, July 21, 2010. (Sean Kilpatrick / THE CANADIAN PRESS)

Canadas labour market slipped after two straight months of strength, sending the currency lower and providing the Bank of Canada with more ammunition if it decides to cut interest rates at its next meeting.

The country lost 1,800 jobs in October, Statistics Canada said Friday in Ottawa, versus economist expectations for a 15,000 uptick in employment. It was the first month of job losses since July and comes on the heels of a 135,000 job gain over the prior two months. The unemployment rate held steady at 5.5 per cent.

While the Bank of Canada left the door open for a rate cut last week after citing ongoing trade tensions weighing on global growth, its held off from easing monetary policy in part because of strength in the labor market thats driving household consumption. That view isnt likely to be altered by one month of data, but could change if a pattern of a cooling jobs market emerges going forward.

The overall trend in employment is still respectable so I dont think it will by itself push BOC to an immediate cut, but the risks are clearly rising, Vassili Serebriakov, FX strategist at UBS Securities LLC, said by email.

The Canadian dollar dropped on the report, falling 0.3 per cent to $1.3170 per U.S. dollar at 11:03 a.m. in Toronto trading. Yields on Canadian two-year bonds were down nearly three basis points to 1.58 per cent.

Full-time positions fell by 16,100, while part-time increased 14,300. The unemployment rate held steady at 5.5%, matching the median forecast, and wage gains accelerated. Election-related hiring helped offset a some of the declines with the public-sector adding 28,700 jobs despite a drop in private-sector and self-employment.

Fridays jobs report was the second weak indicator of the week. Trade figures Tuesday were also disappointing, missing forecasts on lower exports. Markets have priced in a 24 per cent chance policy makers led by Governor Stephen Poloz will cut interest rates next month.

There were, however, bright spots in the October labor force survey. Wage gains for permanent employees quickened to 4.4 per cent on the year, a sign that tightness in the jobs market is boosting pay. Hours worked advanced 1.3 per cent from a year earlier, matching last months pace.