The Canadian economy added a more-than-expected 39,900 jobs in August, according to data released this morning from Statistics Canada. 

The employment gains consisted of an increase of 32.2k full-time positions and 7.8k part-time jobs. As a result, the unemployment was unchanged at 5.5%.  

The largest gains were seen in professional, scientific and technical services (+52k) and construction (+34k). The biggest loss was in the education sector (-44k), which offset large gains in prior months.

StatCan also reported a 4.9% year-over-year rise in average hourly wages following a 5% rise in July.

Bank of Canada will need to see more evidence of a slowing economy

While there are now signs that the country’s labour market is starting to loosen, economists believe the Bank of Canada will want to see more data prior to its October 25 policy meeting to determine if additional hikes are required.

“Canada's job market has been following a sawtooth pattern this year, with a soft report generally followed by a snapback, and this was the month for a minor snapback,” wrote BMO chief economist Douglas Porter.

He noted 50,000 jobs are needed per month just to keep the unemployment rate steady, and thus that it’s “not inconsistent to see a sturdy monthly gain of 40,000 jobs and still conclude that the market is slightly easing.”

With the odds of a rate hike vs. a rate hold at the Bank of Canada’s next policy meeting in October roughly 50-50, TD Economics’ James Orlando said the Bank and market participants “are still looking for more evidence of an economic slowdown.”

September employment data will be released on October 6, 2023.