Canada’s strong jobs report clouds the Bank of Canada’s October rate outlook
A rate hold by the Bank of Canada later this month is now “more probable,” but a rate cut remains on the table, according to Scotiabank’s Derek Holt.
The central bank’s October 29 decision is still “live,” Holt said, as policymakers weigh a surprisingly strong September jobs report against persistent economic weakness.
"We still need to see CPI on October 21st and the BoC’s quarterly surveys the day before, but at this point the odds of skipping the meeting have gone up,” said Derek Holt, head of capital markets economics at Scotiabank.
Holt added that the economy is “still weak and building spare capacity,” which could motivate the central bank to provide additional insurance against a slowdown.
Canada’s labour market surprised in September, adding 60,400 jobs while the jobless rate stayed at 7.1%, Statistics Canada reported. Most of September’s employment gains were in payroll jobs, with the public sector adding 31,000 positions and the private sector 22,000.
Self-employment also ticked up by 8,000. Manufacturing stood out, contributing 28,000 new jobs, while health care, social assistance, and other services also posted gains. The only notable decline came from the retail and wholesale sector.
Canada’s job market surged by 60,400 in September, prompting traders to scale back expectations of a Bank of Canada rate cut. CIBC economist Andrew Grantham said the gains could delay easing, even as labour market slack supports further cuts ahead.https://t.co/us2Pi4pdz5
— Canadian Mortgage Professional Magazine (@CMPmagazine) October 10, 2025
Wage growth slowed for the second consecutive month, rising 2.5% month-over-month on a seasonally adjusted annualized basis. “Collective bargaining exercises remain skewed toward above-inflation wage gains for years to come,” Holt said.
All of the net job growth was in full-time positions, up 106,000, while part-time jobs fell by 46,000.
Alberta led the provinces with a 43,000-job gain, followed by British Columbia’s 8,000. Ontario and Alberta drove manufacturing gains, while Alberta also saw strong growth in construction, professional and technical services, education, public administration, and health care.
However, Holt flagged concerns about the reliability of the data. There was an unusually light month-over-month unadjusted drop in a month that’s usually much bigger, the second year in a row this has happened.
“Is this because of changes in seasonal hiring patterns since the pandemic, or are they not being properly controlled? It’s hard to tell, and Statcan offers nothing to back up whether or not this is credible.”
Holt noted that if last year’s seasonal adjustment factor had been used, job gains would have been closer to 20,000, just a third of the reported figure.
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