Economists had expected the Canadian economy to drop 20,000 jobs in October and the unemployment rate to rise to 7.2 per cent. (Lance McMillan/Toronto Star via Getty Images) · Lance McMillan via Getty Images
Canada’s labour market added 66,600 jobs in October, pushing the unemployment rate down to 6.9 per cent — the second straight month of stronger-than-expected gains, Statistics Canada said Friday.
Economists had expected a loss of about 20,000 jobs and the unemployment rate to rise from 7.1 per cent to 7.2 per cent, according to consensus estimates published by the Bank of Montreal.
“It’s too early to tell, but this could end up being the first sign of recovery for an economy that’s been reeling,” Desjardins economist Royce Mendes wrote in a client note. “This reinforces our revised call that the Bank of Canada moves back to the sidelines next month, leaving rates unchanged after easing in September and October.”
Other observers generally agree that the October Labour Force Survey data point to a hold in December from the central bank. CIBC economist Andrew Grantham wrote that “[o]verall, today’s data is supportive of the Bank of Canada’s thinking that interest rates are now low enough to stimulate the economy, and we continue to forecast no more rate cuts from here.”
Still, economists were quick to caution that the upbeat headline masks softer details beneath the surface. While the headline gain looked strong, several said it did not mark a true turnaround. TD’s Leslie Preston said the report shows “some resilience … but not strength,” adding that “overall job market conditions remain soft.” Mendes also noted that “hiring was somewhat narrowly based, focused in the retail and transportation/warehousing industries.”
The October increase was driven entirely by part-time work (+85,000), while full-time positions actually fell (-18,500). Most of the gains were in Ontario, which added 55,000 jobs, and in industries including retail and wholesale trade, transportation, and information and recreation. BMO chief economist Douglas Porter notes that this provincial strength might have a temporary cause, suggesting Ontario’s gains—particularly in information, culture & recreation and accommodation & food—may have received a bump from the Blue Jays’ playoff run. Construction employment fell by 15,000. Wages were up 3.5 per cent from a year earlier to an average of $37.06 an hour.
Scotiabank’s Derek Holt highlights a potentially worrying signal, pointing out that wages on a month-over-month annualized basis “super-accelerated to 9.6 per cent.” He warns that the combination of rising pay and “tanking” productivity risks pushing inflation higher.
Holt also cautions against reading too much into the monthly job gain, calling the release “a spin of the wheel for a volatile survey.” He notes that typical month-to-month swings in the Labour Force Survey fall within a margin of about plus-or-minus 57,000 jobs, meaning the October gain could still be well within the survey’s normal range of error. Holt adds that Canada “heaped on more jobs of fairly low quality,” with most of the increase coming from lower-paying industries and part-time work. Even so, he writes, the results “vindicate — at least for now — the Bank of Canada’s clear ‘hold’ signal.”
Indeed Canada economist Brendon Bernard describes the report as “a surprising bounce,” noting that “the Labour Force Survey continued its wild ride of late.” He adds that while part-time jobs accounted for the entire increase in October, “this increase followed two steep declines,” and that the share of part-time workers “has bounced between 17.9 and 18.4 per cent in 2025, with little clear trend.” Bernard says compared with a year earlier, when the jobless rate stood at 6.6 per cent, the labour market “has softened… but not dramatically so.”
That volatility echoes what Porter has previously called “wild swings,” with September’s gain following significant job losses in July and August — which themselves came after a surprise gain of 83,000 jobs in June.
The October data did have noteworthy upside. Private-sector hiring increased by 73,000, the first rise since June. Youth employment, which has been recently described as “recessionary,” rose by 21,000 in October, the first increase since January, StatCan says. That pushed the youth employment rate up 0.4 percentage points to 54.2 per cent, while the unemployment rate among 15- to 24-year-olds fell 0.6 percentage points to 14.1 per cent — the first decline since February. The agency notes that despite the improvement, the youth employment rate “remained significantly below the recent high of 59.6 per cent recorded in March 2023, as youth continue to face difficult labour market conditions.”
In spite of the headline job gains, total hours worked edged down 0.2 per cent in October as roughly 87,000 employees lost work time because of labour disputes during the survey reference week. StatCan says the effect was “particularly notable in Alberta where a teachers’ strike, and a subsequent lock-out, led to the closure of most elementary and secondary schools in the province.”
Looking ahead, Indeed’s Bernard is cautious. He notes that employment in goods-producing industries like manufacturing and construction has slipped in 2025 and that “the uncertain trade situation remains a cloud over the outlook.”
Economists note the Bank of Canada will see another set of labour data and also weigh new inflation and GDP figures ahead of its next rate announcement on December 10.
John MacFarlane is a senior reporter at Yahoo Finance Canada. Follow him on X @jmacf.
Download the Yahoo Finance app, available for Apple and Android.