Canada's unemployment rate falls to 6.5%, economy adds 47,000 jobs in September

The economy added 47,000 jobs in September, while the unemployment rate declined for the first time since January to 6.5 per cent, Statistics Canada reported on Friday.

The agency says youth and women aged 25 to 54 drove employment gains last month, while full-time employment saw its largest gain since May 2022.

The agency said that the overall job gains followed four consecutive months of little change

“Basically, this report runs pretty much counter to every assumption most analysts had on the Canadian job market,” said BMO chief economist Douglas Porter in a note.

The “hearty” jobs increase confounded the narrative that Canada’s job market has been weakening, he said, with the unemployment rate declining unexpectedly and full-time employment soaring.

“Finally, the job gains were spearheaded by a 61,200 gain in private sector payrolls,” he wrote.

Looking at the broader trend though, the unemployment rate has been steadily climbing over the past year and a half, hitting 6.6 percent in August.

Inflation that month was two percent, the lowest level in more than three years as lower gas prices helped it hit the Bank of Canada’s inflation target.

The central bank has cut its key interest rate three times this year and is widely expected to keep cutting as inflation has subsided and the broader trend points to a weakening in the labor market.

Despite the job gains in September, the employment rate was lower, reflecting continued growth in Canada’s population.

Statistics Canada said since the employment rate saw its most recent peak at 62.4 per cent in January and February 2023, it’s been following a downward trend as population growth has outpaced employment growth.

On a year-over-year basis, employment was up by 1.5 per cent in September, while the population aged 15 and older in the Labour Force Survey grew 3.6 per cent.

Porter noted that despite the positive news in Friday’s report, there were some “flashes of softness,” namely in the lower total hours worked and the lower participation rate.

Service sectors accounted for all the gains in September, he said.

The information, culture and recreation industry saw employment rise 2.6 percent between August and September, after seven months of little change, Statistics Canada said, with the increase concentrated in Quebec.

The wholesale and retail trade industry saw its first increase since January at 0.8 percent, while employment in professional, scientific, and technical services was up 1.1 percent.

Average hourly wages among employees rose 4.6 percent year-over-year to $35.59, a slowdown from the five-per-cent increase in August.

The unemployment rate among Black and South Asian Canadians between 25 and 54 rose year-over-year in September and was significantly higher than the unemployment rate for people who were not racialized and not Indigenous.

Black Canadians in that age group saw their unemployment rate rise to 11 percent last month while for South Asian Canadians it was 7.3 percent. For non-racialized, non-Indigenous people, it rose to 4.4 percent.