Canada loses 4,700 jobs in October as unemployment rate climbs to 6.7 percent

Canada's unemployment rate rose to 6.7 percent in October as the economy shed 4,700 jobs, Statistics Canada reported on Friday. The increase from 6.5 percent in September came as more people searched for work, and the job losses followed steep declines of 42,000 jobs in August and 68,000 in September. Economists polled by Reuters had expected a gain of 13,600 jobs and a steady unemployment rate. The three-month losing streak suggests the labour market is losing steam after signs of resilience earlier in the year.

"Very disappointing," said Sal Guatieri, a senior economist at BMO. "Normally in a month, if you see 4,700 job losses, it wouldn't be as awful, if not for the fact that we lost on net 110,000 jobs in the previous two months." Private sector employment fell by 53,000 positions in October, its first decline since February. Public sector employment rose by 50,000, offsetting some of those losses after four months of declines.

The weakness was concentrated among young people, with the unemployment rate for those aged 15 to 24 rising to 13.7 percent from 13 percent in September. "We seem to be having a struggle finding jobs for young people, particularly students looking for work," said Avery Shenfeld, chief economist at CIBC Capital Markets. "The economy is just not hot enough." Unemployment among the core workforce aged 25 to 54 held steady.

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Guatieri said the shift in job losses to the private sector was notable. "But now it does seem like the higher interest rates and new tariffs are once again weighing on Canadian private sector businesses, and they've kind of put the brakes on hiring again," he said. The Bank of Canada raised its key interest rate to 2.5 percent in late October, and the United States imposed 50 percent tariffs on a range of Canadian goods in August. "I think that's put a new chill in business confidence in Canada," Guatieri added. Tu Nguyen, an economist at RSM Canada, said stalled Canada-U.S. trade talks this summer also contributed to employer hesitation. "When trade talks just froze like that, it made investor and businesses nervous," Nguyen told CBC News. She expects the unemployment rate could continue to creep up through the end of the year.

On a year-over-year basis, the country added just 17,000 jobs. "In a normal year, we would create more than 200,000 jobs," Guatieri said. Average hourly wages rose 2.2 percent from a year earlier, a slight deceleration from September's 2.3 percent increase. Shenfeld suggested the wage growth reflects slack in the labour market, with Canada's "full employment" rate around 5.8 or 5.9 percent.

Regionally, Alberta shed 24,000 jobs in October, wiping out gains from the previous month and pushing its unemployment rate to 7.3 percent. British Columbia added 12,000 jobs after losses in September. The wholesale and retail trade sector led losses nationally, shedding 29,000 roles, while transportation and warehousing and food and accommodation also posted declines. Gains were seen in construction and education.

Some economists saw a silver lining in a monthly increase of about three percent in job postings on the Indeed website. "It's at least positive that we're starting to see employers express a little more demand there in the last few months," said Cory Stahle, a senior economist with Indeed. He cautioned, however, that more postings do not necessarily mean more hiring. "Employers are clearly saying we want people, but they've just been a little hesitant to actually take that step of hiring them," Stahle said.

The weak job numbers could influence the Bank of Canada's next interest rate decision in early December. "You have to wonder, is this maybe grounds to kind of pause those rate hikes?" Stahle said. Nguyen also predicted the central bank may leave rates unchanged. Shenfeld said three months of job losses is often an ominous sign but not necessarily a recession signal. "I don't yet interpret it as a sign that we're going into recession," he said. "But we do think that fourth-quarter growth is going to be quite sluggish."

With files from BNN Bloomberg, CBC News and Radio-Canada