Canada’s unemployment rate fell to 6.5 per cent in October, its lowest level in six years, as the economy created a better than expected 43,100 jobs last month, Statistics Canada said Friday.
Ontario was the strongest driver of last month’s gains, a sign Canada could finally be reaping the benefits of a U.S. economic recovery, economists said.
Ontario added 37,000 net new jobs in October, most of them full time, driving the province’s jobless rate to 6.5 per cent from 7.1 per cent a month earlier, its lowest level since the recession.
At Queen’s Park, Economic Development Minister Brad Duguid said the positive job numbers for the past couple of months show that Ontario is slowly coming back from the recession, but added there are still too many Ontarians out of work.
“We certainly have some positive numbers coming from this month (October),” Duguid told reporters. “That puts us to 551,300 net new jobs since the global recession.
“Don’t get me wrong, there are still too many people out of work and we’re still going to keep working to ensure that those who are out of work find employment. But it does tell us the numbers are going in the right direction,” he said.
The New Democrats were quick to point out hard-hit communities like Windsor, London, Sudbury and Thunder Bay saw their unemployment rates go up slightly.
Even so, Duguid argued that job growth in Windsor, which has the highest unemployment rate in the province, is up significantly over the past year. “My sense is Windsor is also beginning to get onto the upswing,” he said.
Across Canada, October was the second consecutive month the labour market improved, defying a long entrenched see-saw pattern of monthly gains followed by losses.
In September, the economy created a whopping 74,100 net new jobs. The unemployment rate was 6.8 per cent that month.
Economists had expected employment to fall by 5,000 in October and the unemployment to remain unchanged, according to Thomson Reuters.
“The stronger than expected employment gain . . . is the most encouraging sign yet that the economy may have shifted into a higher gear,” economist David Madani, at Capital Economics, wrote in a note to clients.
Most of the new jobs were full-time and many were in trade-related industries and services, a sign the U.S. economic recovery is finally benefitting Canada.
The U.S. labour market also recorded another month of strong gains, adding 214,000 net new jobs in October, the Labour Department reported Friday.
“All signs are pointing to continued modest improvement in the (Canadian) labour market in the near term,” TD Bank economist Diana Petramala wrote in a note to clients.
Canada’s economy grew 3.6 per cent in the second quarter and is expected to grow between 2 and 2.5 per cent in the third quarter, she noted. A lower Canadian dollar and improving U.S. economy has “kept us cautiously optimistic on the near-term outlook,” she added.
Half of Canadian businesses say they intend to increase employment over the next six months, a recent Bank of Canada business outlook survey also found.
However, economists said they remain concerned about the recent steep drop in oil prices and ongoing uncertainty in the global economy.
Few were expecting the latest improvements in Canada’s labour market to have an impact on the Bank of Canada’s interest rate policy, which has been at an ultra-low 1 per cent level since September 2010.
Across Canada, the youth unemployment rate fell by 0.9 percentage points to 12.6 per cent partly because fewer young people looked for work last month.
In the United States, American employers added a solid 214,000 jobs in October, extending the healthiest pace of hiring in eight years.
The U.S. Labor Department also revised its August and September figures by 31,000 more jobs than previously estimated. Employers have added at least 200,000 jobs for nine straight months, the longest stretch since 1995.
The U.S. unemployment rate fell to 5.8 per cent from 5.9 per cent, its lowest level since July 2008.
Economic growth has accelerated this year and hiring has been robust. Despite the data, the economy was U.S. voters’ top concern in Tuesday’s mid-term elections.
Nearly 60 per cent of voters said they thought the economy was stagnating or worsening. Only one-third saw it as improving.
Better hiring and growth have barely boosted paycheques for the vast majority of Americans. Adjusted for inflation, average hourly pay rose just 0.3 per cent over the 12 months that ended in September, according to government data.
Most wage gains have benefited the wealthiest Americans. Average income grew 10 per cent from 2010 through 2013 for the wealthiest one-tenth of Americans, after adjusting for inflation, according to the Fed. For everyone else, incomes stagnated or declined.
The U.S. Federal Reserve announced last month it was ending its bond purchase program, which had been designed to lower long-term interest rates and stimulate economic growth during and after the recession and financial crisis of 2008/2009.
Analysts say the economic expansion remains strong enough to support the current pace of hiring. Over the past six months, the economy has grown at a 4.1 per cent annual rate.
U.S. manufacturers are expanding at the fastest pace in three years, according to a survey by the Institute for Supply Management, a trade group. A measure of new orders showed that factory output will likely continue to grow in coming months. A separate survey by the ISM found that retailers, restaurants and other service companies grew at a healthy pace last month.
Home sales rose in September at their fastest rate this year, a sign that housing could pick up after a sluggish performance for most of this year.
Still, faltering global growth could create trouble for the U.S. economy in the months ahead. Exports fell in September, the government said this week, widening the trade deficit. That led many economists to shave their predictions of economic growth in the July-September quarter to an annual rate of 3 per cent or less, down from the government’s initial estimate of 3.5 per cent.
— with files from the Star’s Richard J. Brennan and Toronto Star wire services