The Canadian economy has posted a bumper job gain in October, coming in 10 times higher than forecasts, with the jobless rate holding steady, official data shows, with the big beat upping market calls for another oversized interest rate hike.
The economy added a net 108,300 jobs last month, easily beating forecasts for 10,000 new jobs, while the jobless rate was unchanged at 5.2 percent, according to data released on Friday. The blowout gain was entirely in full-time work, spread across both the goods and services sectors.
“It seems Bank of Canada Governor [Tiff] Macklem zigged when he should have zagged, judging by these numbers. They’re very strong. I’m surprised actually,” said Derek Holt, vice president of capital markets economics at Scotiabank.
While other data will be coming before the next Bank of Canada (BoC) rate meeting in December, the jobs surge suggests another 50 basis points increase may be coming, he added.
The BoC raised its policy rate by 50 basis points to 3.75 percent last week and said while more increases would still be needed, it was nearing the end of its tightening campaign.
The employment report bolstered money market bets of another outsized hike in December, with a nearly 70 percent chance of a 50-basis-point increase and the policy rate now seen peaking at 4.5 percent early next year.
The average hourly wage for permanent employees rose 5.5 percent in October on a year-over-year basis, up from 5.2 percent in September. Total employment edged just above May 2022 levels.
Canada’s core-age workers continued to lead gains. The core-age unemployment rate stands at 4.2 percent, slightly above July’s record low, but in a historically tight range last seen in the 1970s.
Prime Minister Justin Trudeau’s government on Thursday set out billions in new spending to support low-income workers among other things.
The Canadian dollar was trading 1.6 percent higher at 1.3525 to the greenback, or 73.94 US cents.