A “jolted back to life” labour market is still not enough to stop the Bank of Canada from pausing on interest rate cuts at its next meeting later this month, some economists say. The country gained 60,000 positions in September, according to Statistics Canada data released on Friday, topping economists’ median estimate of a gain of 5,000 positions. Nevertheless, the

unemployment rate held steady at 7.1 per cent. The labour market has swung from net job losses to gains over the past few months. For example, in August and July the economy lost a combined total of more than 105,000 positions — 66,000 in the former and 41,000 in the latter.

‘Jolted back to life’: CIBC

Here’s what economists think the latest job numbers mean for the Bank of Canada and interest rates. “The Canadian labour market jolted back to life in September,” Andrew Grantham, an economist at CIBC Capital Markets, said in a note.

However, he said the data cannot be viewed in isolation of what came before, namely serious weakness in July and August, adding that the three-month and six-month averages come in at a loss of 15,000 positions and a gain of 9,000, respectively.

While the manufacturing sector may have gained thousands of positions, Grantham said “that only partly offsets the decline seen since the start of the year.” He also pointed to the job losses in other trade-sensitive sectors, including transportation and warehousing and wholesale and retail trade, that tempered the overall increase.

All told, he said the data suggests the economy is not in a position to absorb the slack that exists in the labour market.

“Because of that, we continue to forecast a further interest rate cut from the Bank of Canada later this month, although upcoming (consumer price index) data remains important to that view,” he said.

‘Best arbiter’: Desjardins

“The unemployment rate remains the best arbiter of supply and demand conditions in the labour market,” Royce Mendes, managing director and head of macro strategy at Desjardins Securities, said in a note.

He said the unemployment rate remains stuck at elevated levels and, excluding discouraged workers who form part of Statistics Canada’s calculations, the jobless rate would be six per cent, well above the United States’ rate of 4.3 per cent. The U.S. Federal Reserve cut its interest rate last month based on job market weakness.

“Given the persistently elevated unemployment rate, we still believe the Bank of Canada needs to lower rates to get the economy back on track,” he said.

Mendes estimated third-quarter gross domestic product will come in somewhere between zero per cent and one per cent.

The federal government is expected to unveil significant fiscal stimulus in its

fall budget on Nov. 4, but he said that money will take some time to filter into the economy.

If the Bank of Canada doesn’t act to cut rates later this month, “there would be no policy support for the economy in the months to come,” he said. “As a result, we maintain our view that the Bank of Canada will cut rates down to two per cent.”

‘Surprising, suspicious’: BMO

“The wild swings in headline job tallies in the past four months serve as a loud reminder to not be heavily swayed by one or two reports, since the wind direction can change very quickly,” Douglas Porter, chief economist at BMO Capital Markets, said in a note.

Employment in Canada is still only up 0.1 per cent since January, when the threat of

tariffs burst onto the scene. Still, most details of the report were “positive,” he said, including an increase in full-time jobs of 106,000 and the private sector adding 21,000 positions. The manufacturing sector contributed 27,800 jobs, “perhaps the most surprising/suspicious aspect of the report,” he said.

“Today’s strong report is certainly welcome after the big declines in the prior two months,” he said.

Ontario is bearing the full force of the trade war, with Statistics Canada saying the province failed to notch any job gains in September.

Porter said the “solid” report puts the Bank of Canada in a position to hold interest rates at its Oct. 29 meeting unless inflation data for September comes in extra cool.

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‘Genuine strength’: Capital Economics

“Bar a 21,000 fall in wholesale and retail trade employment, the report showed broad-based strength across most industries,” Bradley Saunders, North America economist at Capital Economists Ltd., said in a note.

He said September’s results appear to “reflect genuine strength” given the absence of a seasonal “quirk” from youth unemployment.

The unemployment rate still stands at 7.1 per cent, its highest since August 2021, but he said the job market doesn’t appear to be in as poor shape as the July and August labour reports suggested.

He said the Bank of Canada will likely wait until December to make another rate cut based on policymakers’ focus on inflation risks, as indicated in their deliberations during the previous rate decision in early September.