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Analysts at TD Securities point out that the Canadian economy added 53k jobs in September, beating the market consensus for +7.5k.

Key Quotes

“Details were largely upbeat with full time employment (+70k) leading job growth while the one wrinkle was a modest pullback in private employment (-21k). However, this comes on the heels of outsized gains during August, and private employment is still 70k higher over the last two months.”

“The robust job growth was not the only positive element of this report; the unemployment rate fell to 5.5% in September while wage growth firmed back to 4.3% y/y (from 3.8%). The former is even more impressive when considering the participation rate has increased 1.4pp from last October and more comprehensive measures that capture discouraged and involuntary part time workers showed similar improvement, with the R8 rate falling from 8.1% to 7.8% (pre-crisis low was 8.3%). Hours worked fell by 0.3% m/m, but that shouldn’t take much away from the overall strength of this report.”

“We don’t think these numbers are sustainable, and we don’t think they tell the full story for the Canadian economy – but they do underscore the different policy outlooks facing the BoC and Fed. Robust labour market performance gives the BoC a cushion the Fed doesn’t enjoy, and will let the BoC lag behind the Fed for a longer period than would normally be plausible.”

“We continue to look for an ease in January, predicated on a weaker global outlook.”