By Ketki Saxena
Investing.com -- In a “blowout” report, Canadian jobs jumped by 108,000 (+0.6%) in October, while the unemployment rate remained at 5.2%.
Average hourly wages rose 5.6%, while total hours worked increased 0.7%.
Douglas Porter , CFA Chief Economist and Managing Director Economics and BMO (TSX:BMO), notes that today’s reading “blast[ed] past consensus and wash[ed] away the sluggish results over the prior four months. This report was strong like bull with no significant soft spots”.
Porter notes that the numbers also raise “serious doubts over the extent of any economic slowdown.”
In light of the data, BMO has revised its forecast for GDP growth in the fourth quarter. While previously expecting the economy to “basically stall” in the period, the bank now expects Q4 to “be up 1.3% at annual rates versus the Q3 level, consistent with at least moderate GDP growth this quarter.
Rishi Sondhi, Economist at TD (TSX:TD) also highlights the across-the-board strength of today’s report.
“ Wow. This jobs report checked all the boxes in terms of being a blowout report. Headline job growth surged, and gains were powered by full-time, private sector positions”.
He also points to hours work, accelerating wage growth as indicators of strength. While acknowledging that the unemployment rate was unchanged, Sondhi notes that “this was due to many more Canadians looking for work – a healthy sign for growth”
In terms of what today’s report indicates for the Bank of Canada, Sondhi believes “This report also justifies the Bank's stance that more needs to be done on the rates front.”
TD forecasts now anticipate an additional 50 bps of tightening by the end of the year.
Today’s report will put further pressure on the Canadian central bank, which has been growing increasingly concerned about embedded inflation expectations and a wage-price spiral.
Porter notes that "Beyond the sturdy growth implications, the BoC will also cast a wary eye on the renewed upswing in wages."