Canada’s jobs report came in much better than expected today, but economists are calling it the calm before the storm.

“Canadian employment stunned market expectations for the second month in a row, churning out a small increase of 1,800 in October against consensus estimates of a loss of 20,000, or more,” says BMO Nesbitt Burns Inc.

However, the firm notes that full-time positions dropped by 26,300 in the month, and only a big increase in part-time positions kept payrolls moving forward. The unemployment rate rose anyway, to a two-year high of 7.3%.

“Canada’s job market continued to cling on to dear life in October, but the steady flow of sour economic data in recent weeks should leave little doubt that its days are numbered,” says TD Bank.

“There were many ominous, if not outright alarming signals in this morning’s data. For one, Canadian employers dramatically reduced the number of hours worked during the month, which is typically what occurs in the early stages of a downturn in economic activity, before companies start shedding positions outright. In addition, some of the sectoral trends are quite simply not sustainable.”

RBC DS Capital Markets Research notes that this is the second straight month that the labour survey defied market expectations, “but the lagging nature of employment data and evidence of considerable ongoing economic weakness leads us to believe that worse is yet to come on the employment front.”

TD concludes that Canada will likely shed 50,000 positions over the next two months, lifting the unemployment rate to 7.6% before year end.

CIBC World Markets sees the jobless rate near 8% by the spring of next year, and pre-emptive rate cuts as a result. “This is the last employment report the Bank of Canada will see before its November 27 rate announcement, with the underlying weakness of today’s release and the prospect of massive near-term layoffs leaving them in a position to cut rates by half a point.” RBC agrees that 50 bps is still in the cards.