Canada's Surprising Job Gains: A September Turnaround

In a surprising twist, Canada's economy recorded an unexpected surge in job creation for September, with a net increase of 60,400 positions, according to data released Friday. This development almost entirely offset the employment reductions seen in the prior month, although the unemployment rate persisted at a multi-year high of 7.1%, unchanged from August.

Reuters polls had suggested far more modest gains of 5,000, with expectations for unemployment to rise slightly. However, full-time jobs fueled the turnaround, boosting employment across 10 of 16 industry groups. Notably, this gain defies the year's trend of slower job growth, partly affected by U.S. tariffs.

Despite the improvements, a cautious outlook remains due to the increasing slack in the labor market. The youth unemployment rate climbed to 14.7%, the highest level in 15 years. Economic uncertainty, compounded by the impact of tariffs, signals potential challenges ahead for Canada's economy and Bank of Canada's monetary policy.

(With inputs from agencies.)