Canada’s unemployment rate fell to 5.2 per cent in September, Statistics Canada reported Friday, amid a modest gain in jobs and a dip in the percentage of people looking for work.
The country added 21,000 jobs in the month, according to the latest Labour Force Survey.
Overall employment was “little changed” in the month, the agency said, and attributed much of the dip to fewer people looking for work.
Canada’s labour force participation rate — the percentage of people who want and are looking for a job — edged down slightly by 0.1 percentage points in September.
The report also looked at retirement among Canadians under the age of 65, one key factor in the apparent shortage of workers. Nearly one million Canadians between the ages of 55 and 64 said they were retired in September.
Over the last 20 years, the labour force participation rate has fallen steadily, largely due to an aging population.
The gain in employment was expected as job losses in the education sector during the summer were reversed with the reopening of schools.
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The report says gains in education, health care and social assistance were offset by losses in several other sectors, including manufacturing and information, culture and recreation.
As children headed back to school in September, the report also examined the effect of childcare responsibilities on career decisions. Despite a record high employment rate, women between the ages of 25 and 54 with children under the age of 16 were twice as likely to decide not to apply for a job or promotion over the last year than their male counterparts.
Women were also twice as likely as men to report helping their children with homework and home-schooling most or all of the time.
Average hourly wages were up 5.2 per cent year-over-year in September.
What does this mean for the Bank of Canada, interest rates?
Before Friday’s release, the Canadian economy had posted three consecutive months of job losses, as signs of an economic slowdown began to appear.
The Bank of Canada has highlighted the country’s tight labour market as one sign the economy is running too hot. The central bank has continually raised interest rates since March in an attempt to take steam out of the economy and tamp down inflation.
TD Bank senior economist James Orlando said in a note Friday morning that the drop in the unemployment rate last month tells the Bank of Canada “a greater recalibration is needed” — meaning interest rates will need to keep rising well past the current 3.25 per cent.
“With the economy yet to find a balance that would allow inflation to return to normal levels, we expect the BoC will continue to lift the policy rate, getting it to four per cent by year-end,” Orlando wrote.
CIBC senior economist Andrew Grantham said in a note that the low jobless rate and strong wage growth will reinforce the need to hike rates by half a percentage point at the central bank’s next decision date on Oct. 26.
But he added that the broadening of job losses to more sectors should “bring a more cautious approach from policymakers after that.”
BMO chief economist Doug Porter agreed that the “underlying cooling” could prompt the Bank of Canada to slow the pace of hikes.
He said in a note that the upcoming Business Outlook Survey on Oct. 17 and September’s inflation print will have the final say on how high the central bank goes in its next rate decision.
— with files from the Canadian Press
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