Canada's job market unexpectedly rebounded in October, with the unemployment rate dropping to 6.9%.

The Canadian labor market delivered a better-than-expected performance in October. According to data released by Statistics Canada on Friday, 66,000 net new jobs were added in October, and the unemployment rate unexpectedly dropped from 7.1% to 6.9%, marking the second consecutive month of improvement. This result significantly exceeded market expectations. Economists surveyed by the Bank of Montreal had originally predicted a decrease of 20,000 jobs in October and an increase in the unemployment rate to 7.2%. The data shows that the increase in employment in October was mainly driven by part-time positions, while full-time positions remained relatively stable. Employment in the private sector increased by 73,000, marking the first rebound since June and indicating a recovery in business hiring intentions. By industry, employment gains were concentrated in retail and wholesale trade, transportation, information, and entertainment services, while employment in the construction industry decreased by 15,000. In terms of regional distribution, nearly all of the employment growth came from Ontario, with 55,000 new jobs added, accounting for over 80% of the national increase in employment. Average hourly wages increased by 3.5% year-on-year, reaching $37.06 CAD per hour, but the growth rate remains below the wage increases during the peak of inflation. The Canadian labor market has experienced significant fluctuations this year. The Statistics Canada noted that the cumulative job gain in September and October of 127,000 (+0.6%) offset the job losses of 106,000 (-0.5%) in July and August. Chief economist at BMO, Douglas Porter, described recent employment trends as having sharp swings, with a significant increase of 83,000 jobs in June followed by consecutive declines in the summer, and a strong rebound in September and October. CIBC economist Andrew Grantham wrote this week that if the unemployment rate remains stable, it will reinforce market expectations for the Bank of Canada to pause its rate hike/cut actions in December. However, he also pointed out that due to the "significant slack" in the labor market, if the economic recovery progresses slowly, the central bank may restart rate cuts in 2026 to accelerate the recovery process.