(Bloomberg) — Canada’s economy posted a small increase in employment, underscoring continued weakness in the labor market that had already convinced the central bank to cut rates at a faster pace.

Statistics Canada said the country added 14,500 jobs in October, which missed an average expectation of a 27,200 increase in a Bloomberg survey of economists.

That’s the smallest gain among the seven months this year when the labor market added jobs and well below the average monthly pace of about 40,000 jobs. The unemployment rate held steady at 6.5%, beating forecasts of 6.6%.

Friday’s report showed an economy that is still creating jobs but has room to produce more. Bank of Canada policymakers cited a weakening labor market as a reason for accelerating the pace of cutting borrowing costs last month. Some economists see the possibility of another big cut at the next and final decision this year on December 11.

Traders appeared to shrug off the report, with the loonie continuing to trade near a session low of $1.392 per US dollar and the benchmark 2-year yield down about half a basis point to 3.06% at 8:54 am Ottawa time. Swap markets put the odds of a 50 basis point cut next month at about one currency.

The participation rate fell 0.1 percentage points – the fourth monthly decline since May – to 64.8%, the lowest since December 1997 outside the Covid-19 pandemic. The decline in labor force participation over the past year largely reflects a decline in college students looking for work and has also been influenced by the longer-term trend of increasing retirements from an aging workforce.

The employment rate – the proportion of the working-age population that is employed – fell by 0.1 percentage points to 60.6%.

Wage growth for permanent employees accelerated to 4.9 percent in October, up from 4.5 percent last month and beating the 4.5 percent rate expected by economists.

There is still one more jobs report scheduled before the December 11 rate decision. Friday’s announcement “will never close the book” on the debate over whether to expect a 25- or 50-basis-point cut at that meeting, said Andrew Grantham, economist at Canadian Imperial Bank of Commerce.

“The mixed nature of today’s data didn’t help, but we continue to lean toward another 50 basis point move,” he said in a report to investors.

What Bloomberg Economics Says

“October’s Canadian jobs survey details are not as disappointing as we expected. But the negative total employment surprise will give the BoC cover to keep cutting rates as it rushes back to a neutral policy stance.”

— Stuart Paul, US and Canadian economist

Read the full report here.

Overall, not much appears to have changed in the labor market, Charles St-Arnaud, chief economist at Alberta Central, said in an email. Job growth continues to be weak, but a decline in labor force participation has left the unemployment rate unchanged, he said.

“There is nothing to change our view that the Bank of Canada should cut rates by 50 basis points in December. However, it remains to be seen whether the Bank of Canada will want to continue its accelerated path to neutral and may depend on the next CPI release.”

The job gain was led by growth in business, construction and other support services, which is a broad sector that includes waste management and administration and saw its first gain since May. Employment also increased in accommodation and food services, education services, manufacturing and construction.

Finance, insurance and real estate, transportation and storage, and public administration lost the most jobs last month.

Regionally, employment increased in Alberta, New Brunswick and decreased in Prince Edward Island. Little has changed in Ontario and Quebec.

–With assistance from Jay Zhao-Murray.

(Add the market, the economist’s reaction beginning in paragraph five.)

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