CIBC Says Sept. Jobs Data Suggests "Large Degree of Slack" Remains In Labour Market, Justifying Further Interest Rate Cut; But Can't Say When

09:18 AM EDT, 10/10/2025 (MT Newswires) -- The Canadian labour market "came back to life" in September, although a rebound in participation kept the unemployment rate elevated, CIBC said Friday after the release of LFS employment data for September.

"Overall," CIBC said, "today's data still suggests that a large degree of slack remains within the labour market, which we think justifies a further interest rate cut from the Bank of Canada, although today's strength in employment could delay the timing of that move, particularly if the upcoming CPI print is also stronger than expected."

CIBC noted the 60K gain in jobs was well above the consensus forecast (5K) and even CIBC's own more optimistic view. It noted the composition was also strong, with employment driven by full time positions (106K) and prime aged (25-54) workers. However, CIBC said, the headline gain needs to be viewed in the context of what preceded it, and that weakness in July/August means that even after today's data the 3 and 6-month averages remained soft at -15K and +9K respectively.

Strangely, CIBC added, given ongoing uncertainty amid US tariffs, the manufacturing sector saw the largest increase in jobs during September (+28K), although that only partly offset the decline seen since the start of the year. It noted the unemployment rate held steady at 7.1%, with a tick up in participation preventing it from coming down. Wage growth for permanent workers held steady at 3.6%, in line with expectations.

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