The Canadian economy added a thumping 52,100 jobs in September, almost all of them full-time, defying expectations and bolstering the Bank of Canada’s case for an eventual interest rate rise.
However, the unemployment rate rose modestly to 7.4% from 7.3% in August as more people participated in the labour market, Statistics Canada said in its release on Friday.
The economy has added an average of 21,600 jobs per month in the past six months. September saw 44,100 new full-time jobs and 8,000 part-time.
The median forecast in a survey of analysts was for 10,000 new jobs, and even the most optimistic forecast was only for 28,000, after August’s rise of 34,300.
“The key point here is the economy is still churning out jobs at a healthy pace,” said BMO Capital Markets deputy chief economist Doug Porter.
“I wouldn’t read too much into the month-to-month number but it’s impressive and it is not reversing a big decline the prior month, so we can’t brush this aside.”
Still, Porter said while the Bank of Canada is concerned about the economy growing faster than potential, the rise in the unemployment rate and tepid gross domestic product numbers suggest that the economy is not at that stage yet.
The central bank repeated on Thursday that it may have to hike rates to the extent that growth continues and excess supply is gradually absorbed.
All the figures are seasonally adjusted, and Statistics Canada has had difficulty over the past several years adjusting for teachers who leave the work force in the summer and return at the start of the school year.
But that did not appear to be an explanation for this September’s overall job growth, as “educational services” saw 13,600 fewer positions during the month.
Instead, the new posts in September were predominantly in retail and wholesale trade, construction, the information, culture and recreation sector, utilities and agriculture.
The Canadian dollar climbed to a 10-day high of $0.9740 to the U.S. dollar, or $1.0242 US, soon after the U.S. and Canadian data was released, compared with $0.9810, or $1.0194, minutes earlier.
Overnight index swaps, which trade based on expectations for the central bank’s key policy rate, showed traders had eliminated bets on a rate cut over the next few months and instead, had raised bets on a rate hike some time in 2013.