The Canadian economy again generated more jobs than anticipated last month, suggesting that the economy is beginning to shrug off the tariff shock. According to an update just published by Statistics Canada, 66,600 new positions were added in October and the unemployment rate dropped to 6.9 percent. Consensus estimates—which have become less reliable in recent months—had pointed to 5,000 new hires, with the jobless rate holding at 7.1 percent. 85,100 positions were added in part-time roles, while 18,500 were lost in full-time work. An average 27,200 full-time jobs were added over the last three months, while the part-time component has shed an average -6,700.
The services sector generated most of the gains, but gains were widespread, with the retail, transportation, recreation, and manufacturing industries offsetting losses in the agricultural, natural resources, and construction segments. The private sector added a total of 73,200 jobs against a -4,200 loss in government.
Total hours worked were up 0.7 percent year-over-year despite falling -0.2 percent in the month, and the average hourly wage for permanent employees—closely watched by monetary policymakers—rose 4.0 percent from a year earlier, up sharply from 3.6 percent in the prior month and well above the expected 3.5-percent gain.
The Canadian dollar is driving higher and yields are climbing, suggesting that traders see the Bank of Canada waiting for longer before delivering a last cut in its easing cycle—if it delivers one at all. In remarks made after last week’s decision, Governor Tiff Macklem noted that Canadian policy rates are now at “about the right level,” implicitly raising the bar to further moves.
In currency markets more generally, momentum behind the dollar’s corrective rally is waning as private-sector data points to a softening US economy and political risks in other regions diminish. The greenback is trading on a slightly firmer basis in thin trading as the effects of yesterday’s layoffs-driven tumble wear off, Treasury yields are holding their losses, and equity market futures are setting up for further weakness at the open. Negotiations are intensifying in Washington as politicians come under more pressure to end the longest government shutdown in US history, but evidence of a compromise deal looks limited thus far. Prediction markets are now assigning a 53-percent probability to the shutdown extending past November 16.