OTTAWA — The number of Canadian jobs climbed in October for the second straight month, breaking the economy out of a pattern of alternating gains and losses for the first time in nearly two years.
In doing so, Statistics Canada said the unemployment rate also dropped for the second month in a row to 6.5 per cent, its lowest level since November 2008. The rate had stood at 6.8 per cent in September.
The agency’s October report found the economy added 43,100 net new jobs, which followed an increase of 74,100 positions for September.
Until October, the monthly survey had alternated between job losses and gains every month since late 2012.
The second strong performance in a row was unexpected.
Economists had predicted the economy to lose 5,000 jobs in October and for the jobless rate to remain unchanged, according to Thomson Reuters.
But for National Bank senior economist Krishen Rangasamy, the number that really jumped out wasn’t just the overall labour figure. It was the continuation of employment growth in the private sector.
The private sector also grew for the second month in a row, this time by 70,600 jobs. In September, Statistics Canada data said the private sector added 123,600 positions.
Rangasamy described the combined increase of 194,200 private-sector jobs as the most-positive nugget in the survey.
“You’ve never seen such a big number on record going back to (1976),” he said of the two-month gain.
“Something is happening and I think you shouldn’t underestimate the impact of the U.S. resurgence on the Canadian economy.”
Manufacturing, which added 33,200 more jobs in October, was one area of the private sector that saw an increase. It was a two per cent boost from a year earlier, the jobs report said.
The data also listed gains in retail and wholesale trade, finance, insurance, real estate and leasing.
Provincially, the survey listed job gains in Manitoba, Ontario, Prince Edward Island and Nova Scotia, while employment decreased in New Brunswick. Other provinces saw only marginal changes in employment.
Statistics Canada also found the youth unemployment rate for October fell 0.9 percentage points to 12.6 per cent, as fewer young people searched for work. However, the report said on a year-over-year basis, youth employment increased by 39,000 positions, or 1.6 per cent.
Mark Hopkins, senior economist at Moody’s Analytics, was surprised by the overall survey results, which he believes could signal the Canadian economy has turned a corner.
“I’m always reluctant to read too much into the last two data points, but clearly we’re seeing a different pattern in terms of the job-market performance that we’ve seen over the previous year,” Hopkins said.
He added, however, he doesn’t expect the unemployment rate to fall again in November, predicting it might even climb back up a tick or two.
But that wouldn’t mean a reversal in the promising trend, he added.
“I think there has been a shift and a strengthening now,” Hopkins said.
He believes the momentum, which shows the economy is approaching its potential, will make it increasingly difficult for Bank of Canada governor Stephen Poloz to maintain the trendsetting interest rate at its low level for an extended period.
Last month, the central bank kept its overnight-rate target at one per cent, where it’s been for more than four years, because of pressures on inflation like the lower dollar, cheap oil prices and lacklustre global economic growth.
The bank projected the Canadian economy to gradually return to its full production capacity in the latter half of 2016.
“I think that the Bank of Canada is going to be put in a bit of a tighter spot after this morning’s release in terms of defending its position,” Hopkins said.
The job numbers came as Finance Minister Joe Oliver prepared to unveil the federal government’s fall fiscal and economic update on Nov. 12 in Toronto. Oliver’s office has said it will not contain any new fiscal measures.
In the past, the minister has downplayed the significance of the month-to-month results in Statistics Canada’s labour force survey, but on Friday he took the unusual step of holding a news conference to discuss them.
“As I said before, we don’t rely on one single month but when we have two months … then of course you start to see a trend, which is very positive,” he told reporters.
“Our plan for jobs and growth is working in spite of a fragile international economic environment.”
Rangasamy said he usually recommends people examine the 12-month moving average to ensure the volatile monthly jobs data is smoothed out.
Looking at that figure, he said Canada is adding jobs at a “decent pace” of roughly 15,000 per month. Before the recession, he estimated the economy was gaining about 20,000-25,000 jobs each month.
“Things are not that bad,” Rangasamy said.