The unemployment rate increased to 6.7 percent in October, according to Statistics Canada, with more individuals actively seeking employment.
This marks a rise from 6.5 percent in September, coinciding with a reduction of 4,700 jobs.
The job losses in October follow significant declines in August and September, during which the Canadian economy experienced a cumulative loss of over 100,000 jobs.
Economists surveyed by Reuters prior to the report had anticipated an increase of 13,600 jobs for October and predicted that the unemployment rate would remain stable.
According to Andrew Grantham, a senior economist at CIBC, the recent trend of job losses indicates that there is some underutilization in the Canadian economy.
“Despite the Canadian Labour Force Survey’s well-known volatility, three consecutive monthly declines represent a trend that is difficult to overlook,” Grantham stated in a note to investors.
In October, private sector employment decreased by 53,000 jobs, marking the first decline in this sector since February. Conversely, the public sector saw an increase of 50,000 employees after four months of losses.
Year-over-year data shows that while private sector employment has increased, the public sector has declined, as reported by Statistics Canada.
The unemployment rate for the core working age group, individuals between 25 and 54 years old, remained unchanged.
However, the unemployment rate for those aged 15 to 24 increased by 0.7 percentage points, reaching 13.7 percent.
Young workers have encountered a challenging job market in recent years, although there was little variation in the unemployment rate for this age group during the summer months.
Statistics Canada noted that students faced a higher unemployment rate compared to their peers who are not enrolled in school.
Employment in the wholesale and retail trade sector has shown a downward trend over the past year, leading to a loss of 29,000 jobs in October. The transportation and warehousing, as well as the food and accommodation sectors, also reported losses last month, although gains were seen in construction and education.
Statistics Canada indicated that the layoff rate — the percentage of individuals employed in September who were laid off by October — was “virtually unchanged” from the previous year at 0.7 percent.
Average hourly wages increased by 2.2 percent year-over-year in October, slightly down from the 2.3 percent rise in September.
Both Alberta and British Columbia experienced significant fluctuations in job numbers. Alberta lost 24,000 jobs, reversing the previous month’s gain of a similar amount, resulting in an unemployment rate rise to 7.3 percent. In contrast, B.C. added 12,000 jobs following losses in September.
The job statistics for October were released shortly after the Bank of Canada implemented its first interest rate increase in over three years. Central bank officials stated that the decision was driven by economic resilience and concerns that inflation could escalate, leading to a 25 basis point rise in the policy rate to 2.5 percent.
After maintaining interest rates for nearly a year, the Bank of Canada has raised the policy rate to 2.5 percent. The governor of the bank, Tiff Macklem, stated that the increase was essential to combat inflation exacerbated by rising energy costs.
The job losses correspond with the repercussions of Canada-U.S. trade negotiations that stalled late last summer. Tu Nguyen, an economist at RSM Canada, indicates this uncertainty may have caused employers to hesitate in hiring.
<p"When trade talks froze, it created anxiety among investors and businesses," Nguyen told CBC News.
She anticipates that the unemployment rate may continue to rise as the year progresses. However, initiatives by the federal government to stimulate investment in Canada, including those outlined in the recent budget, could lead to job creation in 2027.
<p"Strategies like the productivity mega-deduction are expected to attract significant investment into the economy, which is beneficial for job growth," Nguyen added.
Nguyen predicts that the weakness in the job market could lead the Bank of Canada to keep interest rates steady at its next meeting in December, rather than pursuing further increases.
