Canada lost 4,700 jobs in October, a third consecutive month of job losses, while the unemployment rate ticked up again to 6.7 per cent.
It is not a coincidence that the past three months saw job losses in the wake of trade talks breaking down with the U.S. in August. While the latest tariffs only affect select industries, these tensions heightened uncertainty and caused businesses to freeze hiring and begin layoffs.
The weakening job market strengthens the case for the Bank of Canada to hold its key interest rate in December before raising it again in January. The odds of a rate hike in December dropped to 33 per cent.
The central bank explicitly emphasized its focus on price stability, with the 2 per cent inflation target as the number one priority.
However, prolonged high oil prices—the bank’s biggest named threat—could be easing. Oil prices saw their biggest drop since 2020 following the results of the U.S. midterm elections.
We expect hiring freezes and layoffs to continue for a few more months in Canada—especially in trade, manufacturing and technology.
Read RSM Canada’s latest analysis in The Real Economy Canada and subscribe for more updates.
One concerning data point to note: the number of private sector employees fell by 53,000, the first decline since February. Businesses paused hiring and laid off workers as a response to high oil prices and uncertainty in trade policy.
The U.S. midterm results may only a moderate effect on the Canadian economy as most tariffs on Canadian exports were put in by executive orders. The main impact of the midterms on Canada could be less uncertainty and volatility—along with potentially lower oil prices.
The data
Wage growth reached 2.2 per cent, well below headline inflation at 3.1 per cent but in line with core inflation—evidence of a cooling job market.
Looking below the headline data, most of the rise in unemployment occurred among youth and people aged 55 and older. Youth unemployment rose 0.7 percentage points to 13.7 per cent and rose 0.2 percentage points for people aged 55 or older to 5.5 per cent.
The unemployment rate for core age group—25 to 54 years old—remained unchanged for men at 5.8 per cent and women at 5.3 per cent.
The unemployment rate in Alberta was particularly eye-catching—a notable rise of 0.9 percentage points to 7.3 per cent. While this number is little changed compared with a year ago, it is unusual for Alberta in a period of high oil prices. It could be a temporary blip given October’s political uncertainty, in which case job numbers should recover in November and beyond.
Get RSM’s Market Minute commentary every morning. Subscribe now.
