The Canadian economy has been churning out higher-than-expected headline jobs figures for five consecutive months, with the latest employment change report showing a 44.4K increase in hiring for October. However, just like the previous month’s labor report, things don’t seem to look too good underneath the surface.

How did the October jobs data turn out?

As Pip Diddy mentioned, majority of the latest hiring gains were comprised of temporary work, as part-time positions during the election season rose by 35.4K while full-time employment increased by only 9K. This suggests that most of the gains could be erased soon, putting some Canadian folks back in unemployed status now that the federal elections are over.

Looking at the employment trends for each sector reveals that the natural resources industry is still down in the dumps, shedding 8K positions in October as an effect of the oil price slump. If you’re wondering why the Canadian economy is sensitive to oil trends, better review our lesson on Intermarket Correlations.

On a slightly more upbeat note, the educational services sector posted a smaller decline of 3.6K jobs compared to the previous month’s 51.3K drop, proving that sharp reduction was just a seasonal adjustment.

What does this mean for the Canadian economy?

If you’ve paid attention in our School of Pipsology lesson on Fundamental Analysis, you’d remember that jobs reports tend to act as leading indicators of economic growth. After all, a stable labor market could lead to stronger consumer confidence and spending, which then leads businesses to ramp up production and investment to keep up with rising demand.

As you’ve probably guessed, the underlying weaknesses in Canada’s employment data could mean downbeat economic prospects for the country, which still doesn’t seem to have recovered from the oil industry troubles since last year. Energy and commodity companies such as Husky Energy, Athabasca Oil, Cenovus Energy, Meg Energy and Devon Energy have announced job cuts in the past months and revealed plans for more layoffs.

How could this affect the Loonie’s forex trends?

Expectations of weaker economic growth could revive calls for more interest rate cuts from the Bank of Canada (BOC), likely weighing on demand for the Loonie. In effect, this could push the currency lower against its forex peers, particularly against the U.S. dollar which is eyeing a potential Fed rate hike before the end of the year.

For now, though, BOC Governor Stephen Poloz doesn’t seem inclined to announce another pre-emptive rate cut, as he has expressed confidence that hiring gains in the non-energy sectors could make up for the losses in the natural resources industry. Aside from that, he believes that the “commodity cycle” could soon lead to a rebound in the oil industry by mid-2017. This probably explains why the Loonie didn’t give up that much ground against its forex counterparts such as the Japanese yen and the euro, which are dealing with their own economic troubles as well.