Economy adds 64K jobs in September, unemployment rate holds steady at 5.5%

The Canadian economy added 64,000 jobs last month as the country's population continues to rapidly grow.

Statistics Canada released its September labour force survey Friday (Oct. 6), which shows the unemployment rate continued to hold steady at 5.5% for the third month in a row.

Canada's labour market has cooled over the last year as interest rates have risen, but the unemployment rate remains below pre-pandemic levels.

The unemployment rate averaged 5.7% in 2019, the year before COVID-19 upended economic trends.

Strong population growth has also been supporting larger monthly job gains, as more people enter the labour force.

The job gains last month were concentrated in part-time work, as total hours worked remained unchanged from August.

More people were working in educational services and transportation and warehousing. Meanwhile, jobs were shed in finance, insurance, real estate rental and leasing, information and recreation, and construction.

The Bank of Canada's rate hikes since March 2022 are beginning to be felt in the Canadian economy as growth slows and job vacancies fall. The central bank's key interest rate currently sits at 5% – the highest it's been since 2001.

Higher interest rates are expected to continue weighing on the economy and affecting businesses' appetite for hiring.

Despite these conditions, however, wage growth has outpaced inflation this year, making up for previous losses to price growth.

Average hourly wages in September grew 5% from a year ago, while inflation came in at 4% in August.

Economists say wage growth can be a lagging indicator of economic conditions, given workers tend to ask for higher wages to compensate for past cost-of-living increases.