Update On Sept. Jobs: Canada's Job Rebound Surprises In September, Raising Questions Over Next BoC Move

10:25 AM EDT, 10/10/2025 (MT Newswires) -- "Well, that's quite the surprise," said TD Economics Friday, in noting Canada's job market looks like it recovered all of August's losses in September. "Importantly," it added, "even for a noisy data series, this is a strong result."

But, TD also said, it's important to note the unemployment rate remained unchanged as the labour force jumped by an even greater amount. Considering population growth slowed to 28,000 people, the biggest surprise was a large influx of new workers despite a weak job market, it added.

TD noted the Bank of Canada's next decision is due at the end of the month and this surprise from the labour market could change the calculus on the decision. However, the bank said, underlying inflation continues to hover within the target range and the unemployment rate suggest the labour market still has excess slack. TD noted the next inflation report is due on September 21 and it said the bar will be even higher for inflation to underperform and bring the BoC onside for another rate cut. "Markets seems to agree as the pricing for a rate cut materially deteriorated this morning," it added.

Elsewhere, CIBC noted the Canadian labour market "came back to life" in September, although it also noted a rebound in participation kept the unemployment rate elevated.

"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 60,000 gain in jobs was well above the consensus forecast (5,000) and even CIBC's own more optimistic view. It noted the composition was also strong, with employment driven by full time positions (106,000) and prime aged (25-54 years) 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 -15,000 and +9,000, respectively.

Strangely, CIBC added, given ongoing uncertainty amid US tariffs, the manufacturing sector saw the largest increase in jobs during September (+28,000), 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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