Friday's Labor Market Report Matters to The Bank of Canada, Says Scotiabank

07:49 AM EDT, 09/05/2025 (MT Newswires) -- Canada will publish the Labour Force Survey (LFS) at 8:30 a.m. ET Friday, said Scotiabank

Most forecasters are on the plus side for Canadian jobs, noted the bank. Consensus ranges from a 45,000 from a United States bank to a gain of 35,000, which is Scotiabank's. The median and mean estimates are both at about 5,000 higher, which is 10,000-15,000 below a longer-run average gain. Most forecasters are clustered within about 0-15,00.

There just isn't much variability in the range of views relative to the 95% confidence interval surrounding monthly changes in jobs, that is more or less, 57,000. Canada's payroll survey lags two months behind, unlike the U.S., which releases both measures simultaneously.

As for the unemployment rate, the most popular estimate is for a one-tick rise to 7% from 6.9% the prior month, but with three forecasters out of 11 in Bloomberg's consensus at an unchanged 6.9% and a couple are a little higher than 7%, added the bank.

After jobs fell by 41,000 and the labor force declined by 33,000 in July, Scotiabank thinks there's a decent shot at jobs outpacing the labor force this time.

Friday's LFS matters to the Bank of Canada, stated Scotiabank. A "meaningful" decline in employment would be taken dovishly by the BoC. It could spin the gross domestic product numbers in whatever way the BoC chooses, by either emphasizing the negative headline, or emphasizing strength in final domestic demand and how consumption soared while looking through high volatility in the trade and inventory figures, with trade possibly on the mend given early tracking in Q3.

Markets will also need to see the next inflation readings this month as the BoC holds its policy meeting on Sept.17.

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