The Canadian jobs report was unexpectedly strong in October, but U.S. firms got down to the ugly business of chopping workers as expected.

“American businesses aren’t taking George Bush’s patriotic pleas to heart — in the wake of September 11, few were hiring, and many were firing,” says CIBC World Markets.

“The result was the largest one-month employment drop in a generation. The 415,000 positions marked the third month of job shedding, a development not seen in any non-recessionary period.”

The jobless rate jumped to 5.4% as a result, a five-year high. And the worst many economists expected for this downturn. The cuts are now no longer just in manufacturing either. Services actually pulled back more than goods industries. Total hours work fell 0.7%, and wages rose just 0.1%.

BMO Nesbittt Burns calls the result, “shockingly dismal”. It says, “This was a completely one-sided report that points to a very weak Q4 GDP result. It confirmed the anecdotal evidence and will have only a modest impact on growth expectations going forward. We still need several months of data to get a good sense of direction for the post-September 11 economy. There is no reason for the Fed to go slow, and we expect the full-dose 50 basis point easing step next Tuesday.”

CIBC cautions that while the market might assume that the September 11 hit is behind us, it expects that the November jobs report will remain quite weak as planned staff reductions take their time to be carried out.

“Note, for example, that the financial services sector was the lone private-sector industry to show a small employment gain in October. Anecdotal evidence from Wall Street doesn’t jibe with that result, and suggests that there are big losses ahead in the November.”

CIBC says that the futures market is putting even odds between a quarter and half point cut by the Fed next week. “With no inflation worries, we see the Fed throwing caution to the wind, and opting for the more aggressive 50 bps move. Either way, we look for a funds rate of 1.75% by year end.”