The surprising resiliency of Canada’s job market might be giving economists reason to reconsider their recession fears. According to Statistics Canada’s latest Labour Force Survey released Friday, the economy added an impressive 67,000 jobs in October—more than three times what most analysts had predicted.
This employment surge pushed the unemployment rate down to 6.2% from 6.4% in September, offering a welcome reprieve after months of gradually climbing joblessness that had many observers concerned about economic headwinds.
“We’re seeing what I’d call a ‘split-screen economy’ right now,” says Beata Caranci, Chief Economist at TD Bank Group. “Consumer spending is noticeably pulling back while the job market continues showing remarkable stamina. It’s an unusual pattern that’s making forecasting particularly challenging.”
The gains were heavily concentrated in full-time positions, which grew by 48,500, while part-time employment increased by 18,500. This full-time growth typically indicates stronger employer confidence than a part-time dominated report would suggest.
What makes October’s numbers particularly noteworthy is they arrived against the backdrop of eight Bank of Canada rate cuts since June, suggesting the central bank’s attempt to engineer a “soft landing” might be working better than skeptics anticipated. The BoC has been threading the difficult needle of cooling inflation without triggering widespread job losses.
But not all sectors are thriving equally in this environment. Construction led the way with 23,000 new positions, reflecting strength in infrastructure spending and commercial building despite the housing market slowdown. Professional services added 15,000 jobs, while education employment grew by 11,000 positions.
Meanwhile, manufacturing shed 8,500 jobs and retail trade contracted by 6,200 positions, highlighting continued pressure on consumer-facing industries as Canadians grapple with inflation and higher borrowing costs.
The regional picture shows similar divergence. Ontario added 31,000 jobs, accounting for nearly half the national increase, while British Columbia (+18,000) and Quebec (+10,500) posted solid gains. Alberta saw essentially flat employment, and Saskatchewan experienced a minor contraction of 2,100 positions.
For workers, wage growth continues outpacing inflation, with average hourly earnings up 5.2% year-over-year compared to the most recent inflation reading of 3.1%. This marks the eighteenth consecutive month of real wage gains after a prolonged period where inflation eroded purchasing power.
“The labour market has been the economic surprise story of 2023,” notes Avery Shenfeld, Chief Economist at CIBC Capital Markets. “But the real question is whether this represents one last hurrah before higher interest rates fully impact hiring decisions, or if we’re seeing genuine economic resilience that could carry into next year.”
The participation rate—measuring the proportion of working-age Canadians either employed or actively seeking work—held steady at 65.6%, remaining slightly below pre-pandemic levels. This suggests there’s still some untapped labour supply that could help meet employer demand without overheating the economy.
Young Canadians saw particularly strong employment gains, with youth unemployment falling to 11.7% from 12.4% in September. However, this demographic continues facing significantly higher joblessness than the overall population.
The technology sector, which had dominated headlines with layoff announcements throughout much of 2022 and early 2023, showed signs of stabilization. Information, culture and recreation industries added 7,500 positions, suggesting the worst of the tech correction might have passed.
For the Bank of Canada, these numbers create an interesting policy dilemma. Governor Tiff Macklem has signaled the central bank’s willingness to continue lowering rates if inflation permits, but robust employment growth might complicate that calculus if it reignites consumer spending and price pressures.
“The central bank may need to move more cautiously with rate cuts if the labour market maintains this momentum,” suggests Frances Donald, Global Chief Economist at Manulife Investment Management. “We’re watching closely for signs of whether this hiring surge represents a trend or merely a temporary bounce.”
For everyday Canadians, the report offers cautious optimism amid persistent affordability concerns. More jobs and rising real wages provide some breathing room, though housing costs remain at crisis levels in many urban centers.
Business investment, which had been sluggish through much of 2023, might see improvement if employers continue demonstrating confidence through hiring. The corporate sector has been sitting on substantial cash reserves, and sustained labour market strength could encourage deployment of that capital.
Looking ahead, economists will be closely analyzing whether this job growth proves sustainable or represents a temporary deviation from the broader cooling trend. The holiday hiring season approaches, traditionally boosting employment numbers, but concerns about consumer spending may lead retailers to staff more conservatively than in previous years.
While one month doesn’t make a trend, October’s surprising employment strength suggests Canada’s economic resilience shouldn’t be underestimated. The coming months will reveal whether this represents a genuine turning point or merely a pause in an otherwise challenging transition.
