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Canada’s unemployment rate held at 6.5% in October as the economy added 15,000 jobs, Statistics Canada said Friday.

Analysts called for the unemployment rate to rise to 6.6% and for the labor market to generate 27,000 jobs.

Numbers provide a piece of the puzzle that Bank of Canada gather to decide whether to oversize the next expected interest cut with a second cut of 50 basis points (bps) or stay with the standard 25 bps.

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An inflation report due on November 19 and the next jobs report will help the central bank fill in the pieces at its next meeting on December 11.

Here’s what economists think October’s jobs data means for the Bank of Canada and interest rates.

“Insufficient”: National Bank

“In October, employment growth was still insufficient to stabilize the ongoing deterioration in the labor market,” Matthieu Arseneau and Alexandra Ducharme, economists at the National Bank of Canada, said in a note.

The pair estimated that the economy needs to add 51,000 net positions, not 15,000, to keep the employment rate from falling further.

The measure is currently down 0.1 percentage points to 60.6 percent, the sixth straight decline and 1.8 percentage points from its peak in 2023, economists said.

“While the employment rate is expected to decline amid an aging population, the speed of the recent decline signals a clear cooling of the labor market,” they said.

With the employment rate falling for the third straight time in the 25-54 age group and the youth employment rate remaining at lows not seen since 1999, barring the pandemic, Arseneau and Ducharme said there is no reason to celebrate the steady unemployment rate. stable.

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In addition, the Bank of Canada’s Business Outlook Survey said hiring intentions fell below their “historical average,” leaving the labor market flooded with workers as employers cut back.

“Overall, we remain concerned about further deterioration in the coming months as monetary policy remains accommodative,” the economists said.

Lots of head fakes: MonFX

“Employment data suggest that the labor market remains weak and the September figure was an aberration,” Nick Rees, senior foreign market analyst at MonFX Pte Ltd., said in a note.

There was a gain of 46,700 jobs in September, but Rees said fewer temporary jobs created over the summer resulted in fewer job losses, resulting in a “misleading” figure.

“With that in mind, last month’s print was soft and today’s reading is a continuation of that trend,” he said.

Rees believes the jobless number is also a sham, given that the participation rate of 64.8 percent — the lowest level since 1997, excluding the pandemic — kept the jobless number from rising to the 6.6 percent analysts expected.

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He also doesn’t think wage growth is as good as it seems, saying “composition effects” are at play.

Still, he is concerned that Friday’s jobs report could give the Bank of Canada pause on a bigger interest rate cut.

“Today’s data is likely to give the governing board pause and marginally raise the risk that they will fail to deliver another 50 basis point cut next month,” Rees said.

25 vs. 50 bps: CIBC

“Canadian employment growth was weak in October,” Andrew Grantham, economist at CIBC Capital Markets, said in a note.

He said the “only reason” the unemployment rate remained flat was that the participation rate – those working or looking for work aged 15 and over – fell.

It was the fourth decline in the measure since May, Statistics Canada said.

“Some of the details were a little better,” Grantham said, citing full-time employment growth and hours worked rising 0.3 percent month-over-month and 1.6 percent year-over-year.

The economist also said that average hourly earnings for permanent workers rose 4.9 percent from a year earlier, accelerating from 4.5 percent in September, while average hourly earnings for employees also rose 4, 9%, but up from 4.6% over the same time frame.

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Earnings growth is one of the metrics the Bank of Canada tracks closely as part of its inflation charges.

“With one more jobs report before the Bank of Canada’s next interest rate decision, today’s release will never close the book on the 25 versus 50 (basis point) debate,” Grantham said. “The mixed nature of today’s data didn’t help.”

CIBC is maintaining its call for another 50 bps cut in December, he said.

“The so-so result”: BMO

“October’s jobs report is very much consistent with an economy continuing to eat modest growth and wage gains a little warm for comfort,” Douglas Porter, chief economist at BMO Capital Markets, said in a note.

He said some details were “slightly supportive”, including job gains in the private sector, the full-time category and the manufacturing sector.

Wages rose more than in September, but Porter said the Bank of Canada has decided that wage growth is more modest, likely in the four per cent range.

“This so-so result doesn’t really set the dial on the Bank of Canada’s counter,” he said, with another month’s worth of economic data to go.

Markets are leaning slightly toward a bigger rate cut, but Porter believes the Bank of Canada could become cautious about the size of its next rate cut as the Canadian dollar struggles, the housing market shows some signs of life and the U.S. economy is still roaring. .

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