CANADA DATA: Labour Force Survey Preview: Stabilization Expected (1/2)

Employment gains are expected to slow sharply in October's Labour Force Survey vs September, to a Bloomberg median of -5k (+60.4k prior), with the unemployment rate remaining steady at 7.1%. In short, this is seen as a relatively stable month after a string of volatile prints, though consensus has been relatively poor of late at anticipating the data.

• To recap the prior report: the unemployment rate ticked up to a post-2016 (ex-pandemic) high of 7.10% from 7.07% prior, though this was below the 7.2% consensus.
• The net change in employment in September defied consensus for a flat reading (5k) and defied two prior months' sharp contractions, with the +60k printing well outside the range of Canadian institutional analyst estimates compiled by MNI (-50k to +25k). It didn't quite reverse the 106k combined drop in the previous  months, with 46k fewer jobs in total over the 3-month period, but it at least brought the 6-month moving average back into positive territory (+9k, after  -7k).
• Overall it was a story of divergences. Full-time employment jumped 106k (a 27-month best) but part-time employment continued to collapse, down 46k (after almost 60k in August). Youth and 55+ employment was negative, but prime-age (25-54) employment saw its first 100+k reading (109k) since February 2022.
• The surprise in the sectoral breakdown was the breadth of improvement across sectors: Goods-producing employment rose by 42k (+2k prior), an 8-month best, on a 28k  rise in manufacturing (also an 8-month best). Services were more mixed but still positive as a whole (+18k, -67k prior),
   marking just the 3rd month this year that both services and manufacturing employment rose. In this sense, it could provide some relief for the Bank of
   Canada that US trade dispute-related weakness is not spilling over too badly into non-trade sectors.
• The latter is probably the factor that will be most closely-watched by the BOC in the report. Governing Council characterized the labour force as "soft" based on the latest data, with the opening statement noting "Job losses continue to build in trade-sensitive sectors and hiring has been weak across the economy."
• One idiosyncratic factors to watch this month is a teachers' strike in Alberta, which should not affect the employment figures (participants will still be classified as employed under the LFS methodology) but could reduce hours worked.