Capital Economics economist Thomas Ryan said that after two consecutive months
of sizable employment declines and a small rise in the unemployment rate, only a
September inflation print well above expectations would put an October BoC rate
hike back on the table. Canadian employment fell 68,300 in September, far below
consensus for a modest increase and below Capital Economics’ prior forecast of
no change. Ryan said the labour market is not as weak as the aggregate data
suggest: part of the drop reflects a pullback among younger workers after
unusually strong summer hiring, and weakness is concentrated in the public
sector. He still expects the BoC to wait until 2027 to begin normalizing policy
rates.
