Canada's September jobs report has added complexity to the Bank of Canada's upcoming interest rate decision on October 28. The country lost 68,000 jobs, following another decline in August, which could ease inflation pressure but also makes loan repayments more challenging for borrowers.
The unemployment rate rose to 6.5%, though a falling participation rate limited the increase. Job losses were significant in educational services, health care, and manufacturing, indicating broader economic weakness. The Bank of Canada had previously held its policy rate at 2.25% in September, citing risks from high fuel prices and tariffs.
For borrowers, a quarter-point rate change could mean roughly $1,250 in annual interest on a $500,000 balance. Meanwhile, Bank of Nova Scotia (TSX: BNS) reported an adjusted return on equity of 14.2% for its fiscal third quarter, up from 12.4% a year earlier. The bank's quarterly dividend stands at $1.14, offering an annualized yield of about 3.62% at the current stock price.
Investors should consider holding a measured position in banks like Scotiabank for their business progress and income, but remain cautious of risks such as Canadian consumer debt and slower loan demand. The next key evidence will be the combination of inflation and lending results, as the current report leaves both concerns visible.