By Promit Mukherjee
OTTAWA (Reuters) – Canada added lower-than-expected 14,500 jobs in October and wages of permanent employees rose, data showed on Friday, as the economy grappled to absorb the slack built up due to a rapidly rising population amid an overheated market.
The unemployment rate stayed unchanged from September but hovered around a 34-month high of 6.5%, Statistics Canada said.
Analysts polled by Reuters had estimated a net addition of 25,000 jobs and the unemployment rate to edge up to 6.6%.
Canada’s business investment and hiring has been muted even after four rounds of rate cuts as high interest rates and inflation have throttled demand, even as the labor force has continued to grow, fueled by record immigration.
This has increased the number of people in the labor force seeking jobs and not landing any, resulting in a steady fall in employment rate, or the number of people employed out of the total labor force.
Canada’s labor force has swelled by 2.4% since last year, flooding the economy with workers, but employment rate has consistently shrunk with October showing a further decline to 60.6% from 61.9% a year ago, pushing joblessness high.
Bank of Canada Governor Tiff Macklem said last month after the rate cut decision that layoffs had remained modest but business hiring had been weak, and that has hit young people and newcomers to Canada.
However, Macklem expressed hope that continued interest rate cuts would help to grow the economy and increase employment.
The jobless rate amongst the youth – aged 15 to 24 – fell 0.7 percentage points in October to 12.8%, the statistics agency said, adding that the employment rate amongst them rose for the first time since April.
The Bank of Canada has reduced its key policy rate by a cumulative 125 basis points to 3.75% with a super-sized cut of 50 basis point last month in a bid to prop up economic growth and absorb the excess labor supply.
Before the jobs report was released, financial markets bets showed that there was a 62% chance of a 50 basis point rate cut on Dec. 11.
The average hourly wage growth of permanent employees rose to an annual rate of 4.9% in October from 4.5% in September, the agency said.
The increase in jobs came entire from full-time employment, while part-time employment shrunk. The additions were broad-based with both goods-producing sector and services sector showing healthy growth.