October 10, 2025•
12:38 PM•
Bank of Canada
• One Comment
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The stronger-than-expected rebound immediately sparked questions about whether the central bank will follow through with another cut at its Oct. 29 decision. Economists say the data complicates the case for more easing, especially with inflation figures still to come.
BMO‘s Douglas Porter said the positives suggest the Canadian economy is still “treading water.” He explained that the Bank’s September cut was partly driven by a weak labour market through the summer, but with those losses now reversed, that justification is “no longer front and centre.”
“That factor is no longer front and centre, so unless CPI (on Oct 21) slows materially, the solid jobs figures leans [sic] toward a pause at the October meeting,” he wrote.
The latest “surprise” from the labour market could “change the calculus on the decision,” according to TD’s Andrew Hencic, though he noted other factors could still weigh on the Bank’s next move.
“However, underlying inflation continues to hover within the target range and the unemployment rate suggests that the labour market still has excess slack,” he said. “…the bar will be even higher for inflation to underperform and bring the BoC onside for another rate cut.”
But not all economists see the jobs rebound as a game-changer.
CIBC’s Andrew Grantham is still expecting a rate cut later this month. describing the report as a sign of stabilization after recent softness. He pointed to “sluggish” quarterly and semi-annual averages and a higher unemployment rate as evidence of lingering “labour market slack.”
“Because of that, we continue to forecast a further interest rate cut from the Bank of Canada later this month, although upcoming CPI data remain important to that view,” he wrote.
Canadian bond yields initially rose following the release, with the 5-year yield up 4 basis points to 2.73% before falling later in the day due to market volatility.
Jobs backdrop: stronger, but not without cracks
Statistics Canada reported that the 60,400 net new positions in September were driven by 106,000 new full-time roles. The rebound offset August’s decline and lifted the employment rate to 60.6%.
Alberta led the way with 42,500 new jobs, while manufacturing (+28,000), health care (+14,000) and agriculture (+13,000) also posted gains.
Still, youth unemployment climbed to 14.7%—its highest since 2010 outside the pandemic years—showing signs of strain beneath the headline numbers.
Average hourly wages rose 3.3% year-over-year.
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Last modified: October 10, 2025
