🇨🇦❗️Cable FX Macro Weekly Note: Canada Labour Report

**As seen in Risk In The Week report 10/06/25, subscribe now! Canada emoployment decreased by 66,000 jobs (-0.3% month-over-month), reversing much of June's gains. This follows a loss of 41,000 jobs in July. Year-to-date (January– August), the economy has shed about 39,000 jobs. The jobless rate rose to 7.1%, the highest since 2016 and up 0.5 points since January. Labor force participation was little changed at around 65%, this helped temper the unemployment spike.

Economists call this "bad news" with "flashing warning lights," aligning with the Bank of Canada's view of "excess labor supply." It precedes the BoC's September 11 interest rate decision, where further cuts (after July's 25 bps reduction to 4.25%) are likely to support growth.

Analysts at RBC said they expect labour 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 labour market weakened significantly through July and August, but early data on hiring demand (indeed.com job openings), and business confidence are not pointing to more significant deterioration, they added. Economists at CIBC wrote that a rebound in employment would be seen as a further sign that the Canadian economy is stabilizing following a tough second quarter. However, they warned that an unemployment rate at or above 7% is still elevated and would put downward pressure on wages and inflation over time, and as a result we still see the need for at least one more interest rate cut from the Bank of Canada.