RBC Sees Signs of Stabilization in Canada's Labor Market Ahead of BoC Decision

06:16 AM EDT, 10/06/2025 (MT Newswires) -- The Canadian Labour Force Survey (LFS) on Friday will be closely watched ahead of the Bank of Canada's next interest rate decision on Oct. 29 after last month's cut, said RBC.

The BoC made the move in September following a deterioration in the labor market over the summer.

The bank expects labor market data to show signs of stabilizing in September with 10,000 jobs added, which would leave the unemployment rate unchanged at 7.1%. The labor market weakened significantly through July and August, but early data on hiring demand (indeed.com job openings) and business confidence aren't pointing to more significant deterioration.

Beyond the headline, heavily trade-exposed sectors, particularly manufacturing, are expected to remain under pressure. The numbers will be analyzed for further signs that weakness is, or not, spreading more broadly across the economy, stated the bank.

As of August this year, Canadian employment is down 25,000 in the manufacturing sector, but still up 38,000 overall, and up 1% from a year ago.

The composition of jobs also matters, added RBC. Any rebound that leans on part-time work would provide less reassurance about underlying strength in the market compared with gains in full-time positions. The increase in employment as of August this year is entirely a result of growth in part-time positions.

Hours worked will also be in focus as a key signal for Q3 gross domestic product momentum, according to the bank.

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