Canada lost 68.3K jobs in September, far worse than the 9.2K gain economists expected, marking a second straight month of steep declines. USD/CAD jumped on the report as a public-sector collapse drove most of the damage, even as wage growth accelerated.
Canada's labor market took a sharp hit in September, with employment falling 68.3K against a forecast for a 9.2K increase, following a prior drop of 41.7K. USD/CAD traded at 1.4232 ahead of the data and jumped to 1.4293 afterward as traders repriced the weaker outlook.
The back-to-back declines now total 110K jobs over two months, and it looks like the US-Canada trade war, which picked up in September, bit into the economy.
Public sector drives the losses
The headline number masks a sharper split underneath. Public-sector employment fell 70.0K while private-sector employment rose 24.1K and self-employment dropped 22.5K. Educational services lost 35.3K positions, and healthcare employment fell 23.1K in its first decline in nearly four years. Quebec accounted for much of the damage, shedding nearly 50K jobs in the month. Manufacturing payrolls fell 13K as well.
Youth employment fell 48.1K, while the youth labour force shrank by about 50K as young workers left rather than registered as unemployed, a pattern consistent with back-to-school timing. Even so, the youth unemployment rate of 12.9% still sits 1.6 percentage points below where it stood a year ago.
Participation slide cushions unemployment, wages hold firm
The unemployment rate rose to 6.5% from 6.4%, matching expectations, but only because the participation rate slipped to 64.8% from 65.0%. The employment rate also fell to 60.6%, and the participation rate now sits at its lowest level since December 1997 excluding the pandemic, though Statistics Canada attributed much of that longer-term slide to an aging population rather than purely cyclical weakness.
Wage pressure, however, did not ease alongside the job losses. Average hourly wages for permanent employees accelerated to 2.3% year-over-year from 2.0%, a move that will make the Bank of Canada uncomfortable.
Sources: Investinglive, ActionForex
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