Canada’s labour market posted its weakest job gain in more than a year and the unemployment rate rose to a 21-month high, adding to evidence the nation’s economy is weakening.

The country added 17,500 jobs in October, while the jobless rate rose 0.2 percentage points to 5.7 per cent, the fourth monthly increase in the past six months, Statistics Canada reported Friday in Ottawa. The figures missed expectations for a gain of 25,000 positions and a jobless rate of 5.6 per cent in a Bloomberg survey of economists.

Wage growth for permanent employees slowed to 5 per cent, missing expectations for a 5.2 per cent gain, but still the fourth straight month of pay raises of 5 per cent or more.

The loonie rose to session highs after the release of both Canadian and US employment data, up 0.2 per cent to 1.3705 at 8:45 a.m. in Ottawa. The yield on Canadian government two-year bonds fell as much as 10 basis points.


The data paints a clearer picture of an economy that’s gearing down, with the pace of job gains running below labor force growth from record population increases. It’s another sign labor demand is cooling while supply is catching up quickly. Bank of Canada Governor Tiff Macklem expects the economy to move into modest excess supply in the fourth quarter, helping to slow consumer price inflation.

Macklem and his officials paused their interest-rate increases for two straight meetings in September and October, and over that period several data releases point to an economy that’s rapidly slowing, despite persistent underlying price pressures. Policymakers are counting on a weaker economy to help ease inflation in the coming months as they wait and watch.

“This keeps the BoC very much sidelined into 2024, but we’ll need to see further softening to see rate cut talk ramp up,” Benjamin Reitzes, a rates and macro strategist at the Bank of Montreal, said by email.

Earlier this week, preliminary industry-based data suggested gross domestic product was flat in September, pointing to a 0.1 per cent annualized decline in output for the third quarter. That would follow a 0.2 per cent contraction from April to June, based on expenditure-based data.

In October, total hours worked were unchanged on a monthly basis and up 2.1 per cent compared to a year earlier. That also points to relatively weak momentum at the beginning of the fourth quarter, when economists surveyed by Bloomberg expect GDP to expand at a 0.1 per cent annualized pace.


This is the first of two jobs reports before the Bank of Canada’s next decision on Dec. 6. A majority of economists expect Macklem to hold the overnight rate steady at 5 per cent, a likely end point in this tightening cycle.

Traders in overnight swaps brought forward their expectations for when the Bank of Canada will start loosening policy, and are now betting policymakers will cut interest rates by 25 basis points in July, from September a day ago.

Canada is experiencing record population growth due to high levels of immigration. Since January, employment growth has averaged 28,000 per month, while growth in the population aged 15 and older has averaged 81,000 per month.

The participation rate held steady at 65.6 per cent. The employment rate — the proportion of the working-age population that’s employed — fell 0.1 percentage point to 61.9 per cent in October, as the population aged 15 and older increased by 85,000, or 0.3 per cent.

Job gains were led by increases in construction, information and recreation, and the healthcare sector. Wholesale and retail trade, manufacturing and real estate industries saw the biggest losses.

Employment rose in Alberta, Saskatchewan, Nova Scotia and New Brunswick, but it fell in Quebec and was little changed in the other provinces.