Data released by Statistics Canada last Friday show the Canadian labour market continues to lose some momentum, weighing on overall economic activity. Job additions slowed considerably in October. The slowdown in labour market conditions has been one of the key indicators prompting the Bank of Canada (BoC) to lower interest rates. The BoC hopes its interest-rate cuts will eventually help spur consumer spending, which might help reignite businesses’ investment in labour.

• The Canadian economy added 14,500 jobs in October, falling short of the 27,200 jobs economists had expected, based on a survey from Bloomberg. In September, the economy added 46,700 jobs. Full-time jobs increased over the month, while part-time jobs declined.
• The education and food services industries added jobs over the month. However, this was partially offset by a drop in jobs in the finance and retail trade industries. The retail industry has seen relatively soft spending in 2024, which has resulted in a slowdown in job growth.
• Canada’s unemployment rate was 6.5% in October, unchanged from September. By comparison, Canada’s unemployment rate was 5.7% in October 2023. This provides another sign of the slowdown in labour market conditions that are weighing on economic activity.
• Amid the modest job gains in Canada’s economy, expectations heightened that the BoC will keep lowering interest rates at its December meeting, potentially by another 50 basis points.

The labour data and other key indicators suggest that Canada’s economy is slowing considerably. Consumer demand, manufacturing activity, and a soft real estate market, among other things, point to weak economic conditions. In response, the BoC has aggressively lowered interest rates to help reignite consumer and business activity. The BoC’s last rate decision of 2024 will be made on December 11.

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