Canada's unemployment rate rises to 6.7 percent after third straight month of job losses

OTTAWA · Canada's unemployment rate rose to 6.7 percent in October as the economy shed 4,700 jobs, Statistics Canada reported Friday. The increase of two-tenths of a point marks the third consecutive month of job losses, following a cumulative decline of 110,000 positions in August and September. Economists polled by Reuters had expected a gain of 13,600 jobs last month. "For anyone hoping that October would bring a recovery in the Canadian job market after back-to-back negative surprises, today's release is a disappointment," said Sneha Puri, an economist with the job search site Indeed.

Private sector employment fell by 53,000 positions in October, its first decline since February. Employment in the public sector increased by 50,000 positions. On a year-over-year basis, private sector jobs are still up while public sector employment is down. The wholesale and retail trade sector led the losses last month, shedding 29,000 roles, while transportation and warehousing and food and accommodation services also posted declines.

CIBC senior economist Andrew Grantham said the figures suggest underlying softness in the jobs market beyond trade-sensitive areas. "It does look as if we're seeing some weakness in the labour market outside of those trade-sensitive areas. So that's a concern for us right now," Grantham said. He added that this could dampen expectations for a rebound in job growth in 2027. The unemployment rate for young workers aged 15 to 24 jumped to 13.7 percent in October, up 0.7 percentage points from September.

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Statistics Canada said the unemployment rate was higher for students compared with youth not attending school. The layoff rate, the proportion of people employed in September who were laid off by October, was virtually unchanged from a year earlier at 0.7 percent. Average hourly wages rose 2.2 percent annually in October, edging down from 2.3 percent in September. Puri said Indeed's Canadian job postings ticked up at the end of last month, which could signal future hiring. She said if Canada gains clarity on U.S. trade policy after this week's midterm elections, it could give employers confidence to hire again. "If this optimism isn't then translated into a strong jobs report in the months ahead, the surprising weakness in headline employment will start to look less temporary and more like the beginning of a renewed cooling in the labour market," Puri warned.

The jobs data comes just over a week after the Bank of Canada raised its policy rate by a quarter point to 2.5 percent, its first hike in more than three years. Thomas Ryan, senior North America economist at Capital Economics, said the uptick in unemployment and muted wage growth show there is still slack in the job market. He argued the data should push back on calls for much more monetary policy tightening. "Ultimately, this adds to our conviction that the bank will hike rates no more than twice more as a precaution against upside inflation risks, before calling it a day," Ryan said.

With files from The Canadian Press and BNN Bloomberg