OTTAWA (Reuters) - Canada unexpectedly added 43,100 new jobs in October, and the unemployment rate dropped to a nearly six-year low of 6.5 percent, prompting market optimism that the sluggish job market might finally be improving.
Analysts had expected a loss of 5,000 jobs after September’s gain of 74,100 positions.
The jobless rate, down from 6.8 percent in September, was the lowest since the 6.4 percent recorded in November 2008, Statistics Canada said on Friday.
“I think that the shift in the labor market is very encouraging,” said Scotiabank chief currency strategist Camilla Sutton. “All in all, it would suggest that the Canadian economic fundamental situation is a bit better than had been priced in.”
Canada’s persistently sluggish job creation record and slack in the economy are among the reasons that Bank of Canada Governor Stephen Poloz said on Tuesday that interest rates needed to remain near-record lows for now.
The Canadian dollar rallied nearly a cent to a session high against the U.S. dollar, touching C$1.1330 to the greenback, or 88.26 U.S. cents, and above Thursday’s close of C$1.1426, or 87.52 U.S. cents. [CAD/]
Finance Minister Joe Oliver told reporters that the recent trend was “very positive.” His media event was announced late on Thursday, but his office denied any suggestion that this meant he was signaling the figures were likely to be good.
The 12-month gain was just 181,800 jobs, or 1.0 percent, with the growth in September and October of this year accounting for two-thirds of the increase. The six-month moving average for employment growth was 27,400, up from 15,400 in September.
The labor participation rate, which is of particular interest to the Bank of Canada, stayed at 66.0 percent, the lowest since November 2001. Full-time jobs rose by 26,500, while part-time positions increased by 16,500.
“It’s difficult to see anything wrong with this number,” said David Tulk, chief Canada macro strategist at TD Securities. “The longer-term trend in hiring is quite impressive.
“The Bank of Canada has started to embrace looking at labor market indicators to help justify their slack in the economy,” he told Reuters. “There’s enough momentum that they might have a challenge to talk their way through this.”
Recent Statscan employment reports have been particularly volatile, prompting some market skepticism.
The two-month total gain of 117,200 jobs was the greatest since the 147,500 recorded in March and April of 2012.
The last time Canada posted two consecutive months of significant job growth was in November and December 2012, which showed a combined gain of 78,200 positions.
BMO Capital Markets economist Benjamin Reitzes said the economy could be vulnerable to slumping commodity prices.
“While it would be nice if this is the start of a better trend for job growth ... we remain cautious,” he said.
Additional reporting by Solarina Ho, Allison Martell and Alastair Sharp in Toronto; Editing by Chizu Nomiyama and Lisa Von Ahn