The Bottom Line:

• October marked a second straight month of headline labour market data that was better than feared – particularly the unemployment rate holding steady after ticking lower in September. But details were once again softer than headlines would suggest. Hiring demand has continued to slow with job openings falling and we continue to think the most likely near-term path for the unemployment rate is higher rather than lower.
• We continue to think there is more urgency for the Bank of Canada to respond to a underperforming Canadian economy (and slowing inflation pressures) with larger and more interest rate cuts than other advanced economy central banks. Our base-case forecast assumes the BoC will cut the overnight rate by another 50 basis points in December. 

    The Details:

• Employment rose 15k in October – close to expectations and still running well below population growth (still elevated at 85k in October)
• The unemployment rate, though, held steady at 6.5% after declining for the first time since January in September. 
• Details underlying headline employment and unemployment rate numbers were mixed.
• Full time jobs rose by 26k (with partial offset from an 11k pullback in part-time work) and hours worked rose 0.3%.
• The unemployment rate, though, only held steady thanks to falling labour force participation (to 64.8% from 64.9% in September and 65.1% in August) and a sharp pullback in unemployment among younger workers (20-24 year olds) that offset increases across other age groups.
• Youth labour market data has been highly volatile, but unemployment rate for the core 25-54 year old cohort that makes up the bulk of the workforce has continued to grind higher, including another increase (to 5.6%) in October.
• Wage growth rose to 4.9% from 4.6% in September, but wages lag broader economic conditions and lower job openings (which have still been falling) and higher unemployment rates continue to argue that growth in pay will slow going forward.
• The three-month rolling average for the unemployment rate overall still hit a new post-pandemic high in October, and driven mostly by a tick higher in the share of unemployment coming from permanent layoffs. 

Source: RBC Economics