In a surprising reversal, the Canadian economy added 60,400 jobs in September after shedding 65,500 positions in August, with gains concentrated in full-time employment. Forecasters in an Econoday survey had expected gains of a maximum of 25,000 jobs for a consensus at 10,000. Still, the unemployment rate remained steady at 7.1 percent, as expected, with the participatiom rate edging up to 65.2 percent from 65.1 percent.

Average hourly wage growth picked up to 3.3 percent year-over-year from 3.2 percent the previous month.

The report comes after the Bank of Canada cited the softening job market as one of three developments that had shifted the balance of risks since July, supporting the decision to cut the policy interest rate in September.

Members of the Governing Council were concerned that continued tariffs and ongoing uncertainty about U.S. trade policy could lead to further labor market weakness across the economy while the impact had until now been concentrated in sectors that rely on U.S. trade. Today's data call for a reassessment and could cool the momentum amid policymakers to deliver another rate cut at the next meeting.

That being said, the Canadian economy shed 45,900 jobs on net in the third quarter after adding 99,300 in the second quarter. The central bank might want to see more data before drawing its conclusions, especially with the unemployment rate failing to decline.

In September, full-time employment rebounded 106,100 after declining 6,000 in August, for a net increase of 49,100 in the third quarter, down from 102,700 in the second quarter. Part-time employment, by contrast, contracted 45,600 in September after declining 59,700 in August, for a 95,000 decrease in the third quarter.

The public sector added 30,700 jobs over the month, outpacing the private sector, which added 21,900 positions. Self-employment was up 7,900.

Goods industries led the rebound with 42,000 jobs added in September. Employment inceased across the board except an 8,200 drop in construction. Manufacturing drove the increase with 27,800 jobs, followed by agriculture, with 13,200 jobs.

Employment in services was up a more modest 18,400, with a 20,800 drop in wholesale and retail trade dragging the overall performance. Four services sectors posted declines for a combined 36,700 job losses. By contrast, health care and social assistance added 13,900 jobs, followed by other services with 12,100 jobs. The four other services sectors posted single-digit gains, led by a 9,400 increase in professional, scientific and technical services.

After two months of huge job losses totaling more than 100K, the Canadian economy is expected to show modest job growth of 10K leaving unemployment flat at a high 7.1 percent.

The Labour Force Survey is a key economic indicator giving an overall picture of employment and unemployment. Employment counts the number of paid employees working part-time or full-time in the nation's business and government establishments. The unemployment rate measures the number of unemployed as a percentage of the labor force.

As in the U.S., this report is used as an indicator of the health of the domestic economy. Employment trends and break-downs by industry groups highlight the strength in job creation and the implications for future sectoral activity. The unemployment rate is used as an indicator of tightness in labor markets and can foreshadow a future increase in wages. Labor force data provide investors with the earliest signs of industry performance. While other data are produced with a month or two delay, these data are available only a week to 10 days after the end of the latest month. Reactions can be dramatic - especially when the result is unanticipated.

The information in the report is invaluable for investors. By looking at employment trends in the various sectors, investors can take more strategic control of their portfolio. If employment in certain industries is growing, there could be investment opportunities in the firms within that industry.

The bond market will rally (fall) when the employment situation shows weakness (strength). The equity market often rallies with the bond market on weak data because low interest rates are good for stocks. But sometimes the two markets move in opposite directions. After all, a healthy labor market should be favorable for the stock market because it supports economic growth and corporate profits. At the same time, bond traders are more concerned about the potential for inflationary pressures.

The unemployment rate rises during cyclical downturns and falls during periods of rapid economic growth. A rising unemployment rate is associated with a weak or contracting economy and declining interest rates. Conversely, a decreasing unemployment rate is associated with an expanding economy and potentially rising interest rates. The fear is that wages will accelerate if the unemployment rate becomes too low and workers are hard to find.