But labour participation rate drops to 65.2 per cent, lowest since 1998
OTTAWA (Reuters) - The Canadian economy added jobs in October with a surge in full-time hiring, and the unemployment rate dipped to a 40-year low, underpinning expectations that the Bank of Canada would keep raising interest rates.
Statistics Canada said on Friday that 11,200 jobs were created and the unemployment rate fell to 5.8 per cent for the first time since July. Analysts in a Reuters poll had forecast a gain of 10,000 positions and for the jobless rate to remain at 5.9 per cent.
Employment rose slightly in Saskatchewan, while there was little change in all other provinces.
Doug Porter, chief economist at BMO Capital Markets, said "the underlying story is still one of improvement in the job market," while predicting the Bank of Canada would keep rates unchanged at its next announcement on Dec 5.
"I do think the bank continues to press ahead in 2019 and we remain comfortable looking for three rate hikes next year," said in a phone interview.
The Bank of Canada on Tuesday reiterated that more interest rate hikes would be needed to achieve its inflation target and that now was the ideal time to remove monetary stimulus, given how well the economy was doing.
Although full-time jobs rose by 33,900 compared to a loss of 22,600 part-time positions, the labour participation rate dropped to 65.2 per cent, its lowest since October 1998.
The average year-over-year wage growth of permanent employees — a figure closely watched by the Bank of Canada — fell to just 1.9 per cent, the lowest since the 1.7 per cent recorded in August 2017.
"We are still in an environment where the path is towards higher rates. But nothing here suggests the Bank of Canada is behind the curve," said Andrew Kelvin, senior rates strategist at TD Securities.