Murray Wood: Who's hot... and who's not
Every Friday, Murray Wood takes a look at the week's news and decides who's hot... and who's not. This week's list inclu...
OTTAWA — The Canadian labour market showed an unexpected hiring surge in September, but economists are mixed on whether the strength is enough to deter the Bank of Canada from cutting its policy rate again later this month.
Statistics Canada said the unemployment rate held steady at 7.1 per cent in September as the economy added some 60,000 jobs in the month.
That topped economists’ expectations for a gain of 5,000 jobs in September and marks a rebound from losses of more than 100,000 positions over the previous two months.
StatCan said the gains were concentrated in full-time work with 106,000 positions added in September, more than offsetting a drop in part-time work.
RBC assistant chief economist Nathan Janzen said there were signs of “stabilization” in the September labour force survey but cautioned against reading too much into one month of jobs data.
StatCan said the economy added a modest 22,000 net jobs between January and September, when threats of U.S. tariffs started to ratchet up trade uncertainty and put pressure on critical Canadian industries.
Janzen said job growth hasn’t been enough to keep pace with the expansion of Canada’s labour force, even as population growth slowed to a virtual halt in the past two quarters.
That’s driven Canada’s unemployment rate up more than half a percentage point from this time last year, he pointed out, suggesting an overall slowdown in the jobs market.
The trade-sensitive manufacturing industry saw its first job gains since January last month and led job growth among other sectors with 28,000 positions added. Before last month, manufacturing had seen a net loss of 58,000 jobs so far in 2025.
Janzen said employment in the manufacturing sector has proven “a little bit more resilient” than he would have first thought given the tariff crunch.
“The key has been that we have yet to really see those concentrated trade impacts spreading more broadly to the rest of the economy,” he said.
Fresh U.S. tariffs coming into play this month on Canadian softwood lumber and furniture such as cabinets mean it’s still too early to declare the worst of the trade uncertainty over, Janzen said.
The health care and social assistance sector and agriculture industry contributed to job growth last month.
The wholesale and retail trade industry lost 21,000 positions in September, but StatCan noted the sector is still up by 61,000 positions year-over-year. The transportation and construction sectors also shed jobs in September.
Alberta, meanwhile, led job growth among the provinces with 42,500 positions added. BMO chief economist Doug Porter said in a note to clients that “mammoth gain” was Alberta’s largest-ever job increase for a single month outside pandemic-era volatility.
Average hourly wages were up 3.3 per cent year-over-year last month, a tick higher than the rate seen in August.
The unemployment rate for youth aged 15 to 24 rose two tenths of a point to 14.7 per cent in September — a 15-year high, outside the pandemic years — as students returning to school continued to struggle finding work after a tough summer jobs market.
The jobless rate among youth attending school was 17.1 per cent, up 3.1 percentage points from September 2024, StatCan said.
The September jobs report marks the Bank of Canada’s last look at the labour market before its next interest rate decision on Oct. 29.
The central bank cut its policy rate by a quarter point to 2.5 per cent last month as it said the balance of risks in the economy was shifting away from higher prices and toward weaker growth.
Porter said the soft summer labour market was a big factor fuelling the September rate cut, so “solid jobs figures lean toward a pause at the October meeting.”
TD Bank senior economist Andrew Hencic said in a note Friday that the September jobs figures may well “change the calculus” for the Bank of Canada. But he said the still-high unemployment rate and signs that underlying inflation is well behaved lately could suggest to the central bank that the economy still has “excess slack.”
Hencic and Porter both said September inflation will have to come in below expectations to warrant another cut in October.
CIBC senior economist Andrew Grantham said in a note that he’s still pencilling in a quarter-point cut from the Bank of Canada later this month while Scotiabank’s vice-president and head of capital markets economics Derek Holt said the odds of a hold are “more probable, but not assured.”
Janzen also said the upcoming inflation report on Oct. 21 will have the final say on whether the Bank of Canada delivers back-to-back rate cuts, but history suggests the central bank will lean toward a second cut.
A single quarter-point cut won’t make a material impact on the economic outlook, Janzen said. If the central bank returned to the sidelines after one cut, it would be a tacit admission that the September rate reduction might have been a mistake, he argued.
“If there was enough evidence to cut in September, there probably still is enough evidence right now of the economy being weak enough to justify another cut in October,” Janzen said.
This report by The Canadian Press was first published Oct. 10, 2025.
Craig Lord, The Canadian Press
