Canada's Job Market Surprises with September Gains

Canada's economy added a net 46,700 jobs in September, leading to an unexpected decrease in the unemployment rate to 6.5%. The robust jobs data have reduced the likelihood of a larger-than-usual interest rate cut by the Bank of Canada, as previously anticipated by financial markets.

In an unexpected turn, Canada added a net 46,700 jobs in September, according to recent data, causing the unemployment rate to fall to 6.5% from 6.6% in August. Analysts had predicted an increase, anticipating 27,000 new jobs. This development has led to a reevaluation of the likelihood of a 50 basis-point rate cut by the central bank.

The robust figures may alleviate concerns about slack in Canada's labor market, reducing the pressure on the Bank of Canada to implement larger rate cuts. The central bank has consistently lowered its policy rate by 25 basis points during its last three meetings, with another cut expected on October 23. The data release has caused the odds of a super-sized 50 basis-point cut to drop significantly.

Meanwhile, the Canadian dollar regained some ground following the jobs report, as the currency recovered from early losses. Notably, full-time job growth surpassed part-time declines, marking the largest increase since May 2022. While the jobs report is strong, some economists remain cautious due to the inherent volatility in local employment data.

(With inputs from agencies.)