The economy added 47,000 jobs in September, while the unemployment rate declined for the first time since January to 6.5 per cent, Statistics Canada reported on Friday – but digging deeper into the numbers shows that employment remains a concern, analysts say.
The agency says youth and women aged 25 to 54 drove employment gains last month, while full-time employment saw its largest gain since May 2022.
The overall job gains followed four consecutive months of little change, the agency said.
On one hand, the news is positive considering that many economists expected the unemployment rate to continue increasing.
“Basically, this report runs pretty much counter to every assumption most analysts had on the Canadian job market,” said BMO chief economist Douglas Porter in a note.
The “hearty” jobs increase confounded the narrative that Canada’s job market has been weakening, he said, with the unemployment rate declining unexpectedly and full-time employment soaring.
“Finally, the job gains were spearheaded by a 61,200 gain in private sector payrolls,” he wrote.
However, other analysts pointed out that the overall market news was “mixed,” with Katherine Judge, an economist at CIBC, stating in a note that “the headline masked some weaker details.”
“Total hours worked decreased by 0.4 [per cent], while the employment rate fell by a tick.”
Looking at the broader trend, the unemployment rate has been steadily climbing over the past year and a half, hitting 6.6 per cent in August.
Inflation that month was two per cent, the lowest level in more than three years, as lower gas prices helped it hit the Bank of Canada’s inflation target.
The central bank has cut its key interest rate three times this year, and is widely expected to keep cutting as inflation has subsided and the broader trend points to a weakening in the labour market.
Employment rate still low, participation in job market down
Despite the job gains in September, the employment rate was lower in the month, reflecting continued growth in Canada’s population.
Statistics Canada said since the employment rate saw its most recent peak at 62.4 per cent in January and February 2023, it’s been following a downward trend, as population growth has outpaced employment growth.
On a year-over-year basis, employment was up by 1.5 per cent in September, while the population aged 15 and older in the Labour Force Survey grew 3.6 per cent.
But the participation rate — which is the percentage of the working-age population that either has a job or is looking for one — dropped in September, the third decline in four months and a continuation of a downward trend seen since late 2023.
“This trims some of the potential enthusiasm from today’s jobs data,” Geoff Phipps, trading strategist at Picton Mahoney Asset Management, said in a note.
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The downtick in the unemployment rate came from that slightly lower labour force participation, according to Brendon Bernard, an economist at Indeed Canada.
“Ultimately, the employment rate is probably the best barometer of the job market’s health, and over the past year, it’s declined in all but one month,” he said in a note.
Some sectors saw employment gains. The information, culture and recreation industry saw employment rise 2.6 per cent between August and September, after seven months of little change, StatsCan said, with the increase concentrated in Quebec.
The wholesale and retail trade industry saw its first increase since January at 0.8 per cent, while employment in professional, scientific and technical services was up 1.1 per cent.
Average hourly wages among employees are also growing at a slower rate. Wages rose 4.6 per cent year-over-year to $35.59, a slowdown from the five per cent increase in August.
Unemployment still rising for some groups
The unemployment rate among Black and South Asian Canadians between 25 and 54 rose year-over-year in September and was significantly higher than the unemployment rate for people who were not racialized and not Indigenous.
Black Canadians in that age group saw their unemployment rate rise to 11 per cent last month, while for South Asian Canadians it was 7.3 per cent. For non-racialized, non-Indigenous people, it rose to 4.4 per cent.