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Jobs data for September came in stronger than expected, as the economy created almost double the number of positions forecast by economists, pushing the unemployment rate down to 6.5 per cent from 6.6 per cent — the first time it has fallen since the start of the year.

Despite the increase in jobs, the employment rate fell 0.1 percentage points, Statistics Canada said in its release. The participation rate — the number of people looking for work or working — also fell in September, the third drop in four months.

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Economists are looking to the jobs numbers to help the Bank of Canada decide whether to cut interest rates by 50 basis points at its next meeting on Oct. 23 or stick with the standard quarter-point cut.

Here’s what economists are saying about the jobs numbers and what they mean for the next Bank of Canada interest rate cut.

‘Weaker details’: CIBC

“The Canadian labour market sent mixed signals in September, as a strong 47,000 jobs were added, above the 27,000 expected, but the headline masked some weaker details,” Katherine Judge, an economist at CIBC Capital Markets, said in a note.

Among the “weaker details,” the number of hours worked fell 0.4 per cent from August, while the employment and participation rates pulled back as well, Judge said.

“Overall, the mixed report isn’t enough to make a 50 basis point cut a sure thing in October,” she said. “The CPI report next week could still make that outcome possible, if they look soft enough.”

‘Not as good as it looks’: Capital Economics

Stephen Brown, deputy chief North America economist at Capital Economics, attributed the increase in jobs and the drop in the unemployment rate to a “seasonal quirk,” as a weaker summer jobs market for young workers meant fewer left positions than usual at the start of the school year.

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Of special note to the Bank of Canada, however, will be the gains in private sector employment, “which the bank is paying close attention to,” Brown said. Employment in that sector rose 61,000 last month — a second consecutive increase. Year over year, it’s up by 193,000 or 1.5 per cent.

Brown also highlighted that average hourly wage increases slowed to a “16-month low” of 4.6 per cent.

“Overall, the September Labour Force Survey reduces the chance of a 50 basis point cut later this month,” Brown said.

‘Won’t change our call’: Desjardins

“A healthy increase in jobs won’t change our call that central bankers will cut rates by 50 basis points later this month,” Royce Mendes, an economist at Desjardins Financial, said in a note.

Mendes said there was plenty of evidence of job sector weakness to push the Bank of Canada to cut rates by a bigger amount.

Mendes attributed the slight decline in the unemployment rate to a drop in the number of people working or looking for work.

He also noted that population outran hiring in September.

Employment is up 1.5 per cent year over year, while those aged 15 and older in the workforce rose 3.6 per cent.

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Also on the negative side, the unemployment rate for those aged 25 to 54 rose to 5.5 per cent.

“Outside of the pandemic, that’s the highest level since 2017, and indicates growing slack among that more critical demographic,” he said.

Give that hours worked are down, Mendes said gross domestic product for the third quarter is tracking at 1.2 per cent annualized, well below the Bank of Canada’s forecast for 2.8 per cent.

“So although markets are paring back rate cut expectations, we are retaining our call that monetary policymakers will need to step up the pace of easing,” he said.

• Email: gmvsuhanic@postmedia.com

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