Canada added 40,000 jobs in August, more than economists had expected, as the unemployment rate remained unchanged at 5.5 per cent.
Until August, the unemployment rate had increased in each of the previous three months.
Analysts polled by Reuters had forecast a net gain of 15,000 jobs in August, and for the unemployment rate to edge up to 5.6 per cent from July.
Statistics Canada said in its release of the Labour Force Survey on Friday that population growth outpaced the increase in jobs in August. As a result the employment rate, or the proportion of people aged 15 and older with jobs, fell 0.1 per cent to 61.9 per cent.
The data agency noted that the Canadian population aged 15 and older increased by an average of 81,000 per month in 2023, and that 50,000 jobs would have to be added per month in order to maintain the employment rate.
Gains in total employment were led by employment increases in professional, scientific and technical services, while jobs fell in educational services and manufacturing.
On an annual basis, average wages increased 4.9 per cent in August, following an annual increase of 5 per cent in July.
What this means for the Bank of Canada
The labour market has been resilient in the wake of one of the most aggressive tightening cycles in the Bank of Canada’s history. The central bank opted to stay on the sidelines on Wednesday, leaving its benchmark rate steady at 5 per cent amid signs that the Canadian economy is slowing.
“This report alone won’t make the Bank of Canada regret holding rates steady earlier this week. However, it does highlight that the economy hasn’t completely stalled,” Royce Mendes, Desjardins’ managing director and head of macro strategy, wrote in a note on Friday.
“We continue to expect that the central bankers are done raising rates. But with progress towards rebalancing the economy slow, they won’t be signalling ‘mission accomplished’ anytime soon.”
BMO chief economist Douglas Porter said Canada will need a steady flow of jobs to match “raging” population growth, so it would not be “inconsistent to see a sturdy monthly gain of 40,000 jobs and still conclude that the market is slightly easing.”