TORONTO - A day after the federal budget pointed to an improved labour market compared to a year ago, new numbers from Statistics Canada suggest that the job market is losing steam. On Friday, the federal agency said the unemployment rate rose to 6.7 per cent in October as more people went looking for work, while the economy shed 4,700 jobs. On its own, that is a small number, but it comes after much steeper losses of 42,000 jobs in August and 68,000 in September. “Very disappointing,” said Sal Guatieri, a senior economist at BMO. “Normally in a month, if you see 4,700 job losses, it wouldn’t be as awful, if not for the fact that we lost on net 110,000 jobs in the previous two months.” Statistics Canada also noted the country added just 17,000 jobs over the last 12 months. “In a normal year, we would create more than 200,000 jobs,” Guatieri said. Private sector pulls back October’s job weakness was concentrated among private employers, which Guatieri said was a shift. Until recently, much of the weakness had been in the public sector. “But now it does seem like the higher interest rates and new tariffs are once again weighing on Canadian private sector businesses, and they’ve kind of put the brakes on hiring again,” he said. The Bank of Canada raised its key interest rate by a quarter of a percentage point to 2.5 per cent in late October, and the United States imposed 50 per cent tariffs on a range of Canadian goods in August. “I think that’s put a new chill in business confidence in Canada,” Guatieri said. “We saw a flurry of job creation back in the spring of this year, early summer. That just simply has evaporated now.” Avery Shenfeld, chief economist at CIBC Capital Markets, said three months in a row of job losses is often an ominous sign, but not necessarily cause for alarm. “I don’t yet interpret it as a sign that we’re going into recession,” he said. “But we do think that fourth-quarter growth is going to be quite sluggish.” Shenfeld said economists had expected a stronger October, partly because of hiring tied to the referendum in Alberta. Instead, employment in Alberta fell by 24,000, and the province’s unemployment rate jumped to 7.3 per cent. Young people struggling Young people across Canada are having a particularly hard time. Unemployment among those aged 15 to 24 increased to 13.7 per cent, up from 13 per cent in September. “We seem to be having a struggle finding jobs for young people, particularly students looking for work,” Shenfeld said. “The economy is just not hot enough.” Canadians looking for work are also staying unemployed longer. Nearly one in four has been searching for at least six months. Shenfeld put Canada’s “full employment” rate at around 5.8 or 5.9 per cent, well below today’s 6.7 per cent. He suggested a slow growth in wages reflects that gap, with average hourly pay rising 2.2 per cent from a year earlier. “Employers aren’t having to pay up a lot to get new workers in the door,” he said. Possible bright spot There are some signs employers may be getting ready to hire. Cory Stahle, a senior economist with the job search site Indeed, said postings in Canada rose about three per cent month over month. He said engineering and logistics support are among the fields where postings are picking up. “It’s at least positive that we’re starting to see employers express a little more demand there in the last few months,” he said. But Stahle cautioned that more postings do not necessarily mean more jobs. “Unfortunately, postings are not the same as hiring,” he said, adding that uncertainty over stalled trade talks with the U.S. is weighing on employers. “Employers are clearly saying we want people, but they’ve just been a little hesitant to actually take that step of hiring them.” He said the weak numbers could influence the Bank of Canada’s next rate decision in early December. “You have to wonder, is this maybe grounds to kind of pause those rate hikes?”
