Canada’s robust employment report for August should put the Bank of Canada back on the interest rate tightening track.

Payrolls jumped 59,400 in the month, more than double the consensus estimates. The jobless rate fell to 7.5%. “Today’s Canadian employment report for August produced yet another jaw-dropping show of strength, extending a long line of consensus-crushing job numbers,” admitted BMO Nesbitt Burns.

It notes that the string of powerful gains brings the cumulative increase to 386,000 net new jobs – the largest 8-month gain on record. “While not quite a record in percentage terms, the 2.6% surge in 2002 ranks right up there with prior robust recovery periods. The stark divergence with the U.S. economy continues,” says BMO.

It notes that the details of the report were also impressive. Part-time positions accounted for more than half the gain, but full-time jobs rose 25,200.

However, Canadian Labour Congress senior economist Andrew Jackson says, “The labour market numbers are strong but there are disturbing signs. More than half, actually 58%, of the new jobs created in August are part-time which is not good in an economy driven by consumers. On the other hand, it is a bit of good news that average hourly wages were up 2.9% from a year ago, or up about 1% in real terms.”

BMO predicts that the robust result increases the chances that the Bank will be back in tightening mode in the fall. “While officials will see another jobs report before their next decision on October 16, and the U.S. data will weigh in, this report will embolden the Bank to again act on its own,” concludes BMO.