It won't escape the Bank of Canada that the economy created far more jobs than expected once again in October, when employment rose 66,600 after a 60,400 gain in September, while forecasters in an Econoday survey had expected gains of a maximum of 15,000 jobs with a consensus at 8,000.

The unemployment rate decreased to 6.9 percent from 7.1 percent, with a participation rate edging up to 65.3 percent from 65.2 percent. The layoff rate was unchanged on the month.

This momentum translated into an acceleration in wage growth, with average hourly wages increasing 3.5 percent year-over-year, up from 3.3 percent in September (unadjusted).

While employment was up, total hours worked were down 0.2 percent from September as labor disputes, notably a teachers' strike in Alberta, led to lost work hours.

The report comes a day after BOC Governor Tiff Macklem reiterated to lawmakers that at 2.25 percent, the policy rate was currently at the right level and that the labor market was soft. In fact, private-sector economists in the 2025 budget tabled this week project the policy rate to remain at this level through 2026. The budget derives its projections from a consensus of private-sector economists.

Today's data will only reinforce this view, especially with the central bank having signaled that there was so much it can do to address the structural nature of the economic damage caused by trade tensions.

There was a caveat to the labor market momentum in October: full-time employment, considered a better reflection of the underlying strength, was down 18,500, as the monthly increase was entirely driven by part-time jobs, up 85,100.

Gains were concentrated in the private sector, with employment up 73,200, the first increase since June. Meanwhile, the public sector shed 4,200 positions. Public-sector cuts are expected ahead, as the 2025 Budget announced efforts to create a more efficient and effective government. Compared to a peak reached in FY2023-24 at nearly 368,000, the public service population is expected to a decline 10 percent or 40,000 by FY2028-29. While the government expects attribution to play a key role, it also announced it would cut 16,000 positions over the next three fiscal years, which should be reflected in employment data.
In October, all employment gains were in services, which added 67,600 positions, while goods-producing industries shed 1,100 jobs, led by a 14,800 drop in construction. Manufacturing, by contrast, was up 8,700, and utilities 7,600.

In services, gains were largely concentrated in three sectors, together accounting for 95,400 jobs: wholesale and retail trade (40,700); Transportation and warehousing (29,500); Information, culture and recreation (25,200). The largest declines were in other services, health care and social assistance, educational services, and business, building and other support services, with declines ranging from -6,800 to -8,200.

Besides the fact that employment all came from a few sectors in services and were only part-time, there were other pockets of weakness in the report, including ongoing difficult labor market conditions for youth.

Long-term unemployment also failed to improve, standing at 21.3 percent, nearly unchanged from a year ago.

Another tiny 8K increase in payrolls is the call with the jobless rate up at 7.2 percent from 7.1 percent in September.

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.