OTTAWA (Reuters) - The Canadian economy added more jobs than expected in October as wages posted their biggest gain in 18 months, a sign that labor market slack could be tightening despite strong employment growth over the last year.
Statistics Canada on Friday reported a net gain of 35,300 jobs - all of them due to a boost in full-time positions - but added the jobless rate had edged up to 6.3 percent as more people sought work.
Analysts in a Reuters poll had forecast 15,000 extra jobs and predicted the unemployment rate would stay at 6.2 percent.
The Bank of Canada, citing the need to remove monetary stimulus as the economy strengthened, raised interest rates in July and September and said it would closely review data before deciding whether to hike again.
Average hourly wages were up 2.4 percent from a year earlier, the strongest year-over-year increase since April 2016.
“Most importantly, we saw a little bit more acceleration in wages ... the labor data does support tighter (monetary) policy at some point next year and perhaps sooner than later,” said Andrew Kelvin, a senior rates strategist at TD Securities.
The Bank of Canada said last week various measures of wage growth remained below their historical averages.
The Canadian dollar quickly rose to C$1.2728 against the greenback, or 78.57 U.S. cents, up from C$1.2829, or 77.95 U.S. cents before the report was released.
Statscan said full-time employment jumped by 88,700 jobs while part-time positions dipped by 53,400.
On a year-over-year basis, employment rose by 308,100, or 1.7 percent, while the six-month average for employment growth was 29,700 jobs, up from 24,300 in September.
Doug Porter, chief economist at BMO Capital Markets, said the Bank of Canada would be “mildly encouraged” by the increase in year-over-year wage growth.
“But I think they need to see more evidence before they can consider raising rates again,” he said in a phone interview.
Separate trade data for September was much gloomier, possibly tempering the central bank’s enthusiasm for a third rate hike in quick succession.
Statscan said the trade deficit remained at C$3.18 billion ($2.50 billion) as imports and exports dropped for a fourth consecutive month.
Analysts in a Reuters poll had forecast a shortfall of C$3.00 billion. Since Statscan started compiling trade data in 1946, exports and imports never both declined for four months in a row.
Additional reporting by Susan Taylor, Solarina Ho and Fergal Smith in Toronto; Editing by Bernadette Baum