09:01 AM EDT, 09/06/2024 (MT Newswires) -- According to Friday's Labour Force Survey (LFS), 22,000 Canadian jobs were created in August, said Desjardins.

That said, all of them were part-time and were largely focused in sectors such as education and healthcare, industries not tied to the business cycle, noted the bank. With population growth strong once again and labor force participation rebounding, hiring in August wasn't enough to keep the unemployment rate from rising two ticks to 6.6%.

While that was in line with our projection, it was higher than the consensus forecast, stated Desjardins. Outside of the pandemic, the 6.6% jobless rate is the highest since May 2017. The unemployment rate for prime-age workers between the ages of 25 and 54 years old also rose three ticks to 5.4%.

The only silver lining was that rising joblessness continues to be driven by new entrants not finding work rather than existing workers losing their jobs. Existing workers are the ones that tend to have high debt loads. So, at least for now, the bank thinks there's still a narrow path to a soft landing.

Overall, the employment data suggest that the economy continued to stagnate in Q3, according to Desjardins. Despite the increase in employment, total hours worked declined 0.1%.

The Bank of Canada (BoC) had predicted a sharp rebound for the economy in Q3, but so far that projection hasn't materialized. The bank's Q3 tracking forecast suggests growth of just 1%, in contrast to the BoC's 2.8% forecast.

Desjardins continues to see a significant chance that central bankers will need to lower the policy rate in October by 50bps to avoid falling behind the curve. That said, with much data still to be released between now and then, it's too early to change the bank's official call.

Government of Canada (GoC) yields are lower on the day, led by the short end of the curve as both Canadian and United States employment numbers disappointed markets on Friday, added Desjardins.