The Canadian jobs report came in stronger than expected once again, but with the gains all in part-time work, analysts say that the jobs picture continues to cool.

Employment rose 32,800 in October, helping push the unemployment rate down to 7.6% from 7.7% in September. Net new hirings in October brought year-to-date job gains to 459,000, up 3.0%. In October full-time employment fell 20,000, while part-time was up 53,000.

“On the surface, today’s Canadian employment report is yet another in a long string of consensus-topping performances. However, it doesn’t take much digging to unearth some serious signs of softer activity in this release,” says BMO Nesbitt Burns. “The three most obvious signals are: 1) All the growth was in part-time jobs, as full-time positions fell by 20,400, or the biggest decline since late last year. 2) Manufacturing is succumbing to the U.S. factory slowdown, as payrolls in this key sector fell heavily (-14,700) for the second month in a row. 3) Total hours worked dropped 1.6% in the month, the steepest fall in a year.”

Nesbitt says that this report was truly a mixed bag, as half of the provinces reported job losses in October, and roughly half the industries also cut positions. Gains in construction, health care, and tourism helped offset declines in transportation, education, financial services, and manufacturing.

“Although an ever-larger number of Canadians are finding work, the general deterioration in full-timers and associated falloff in hours worked suggests that economic growth will pull up a little lame in Q4, after sprinting out of the gates to start the year,” finds CIBC World Markets. “And while the latest burst of new home construction should provide support for Q4 GDP, we anticipate that real economic growth will slip below the economy’s 3% non-inflationary potential in the final quarter of the year — with little improvement likely until the second half of next year.”

TD Bank is more positive about the report. It says, “Today’s Canadian employment report may not have been squeaky clean, but it would take a wild stretch of the imagination to view this morning1s report in a negative light. All told, while today’s report suggests that Canada’s red-hot job market is cooling off, it is not freezing over — and is still light years away from the frosty landscape that has emerged south of the border.”

“On balance, this morning’s employment data are entirely consistent with an economy that is shifting from the 5% growth rate recorded in the first half of 2002 to one that is running slightly below its long-term trend of about 3% — the most likely outcome for the final quarter of this year,” says TD. “Overall, we expect the job market to continue to tone down over the next few months, with the manufacturing sector bearing the brunt of any apparent weakness. On balance, average gains of about 10,000-15,000 positions per month are likely to be in store.”

CIBC concludes that “the ongoing wave of job creation gives the Bank little reason to entertain a rate cut, obvious concerns surrounding the outlook for the U.S. economy should similarly leave them in no rush to hike in the coming quarters.”

Bank of Montreal concludes that the data does little to alter expectations that the Bank of Canada will remain on the sidelines at the December 3 policy announcement date.

And, Nesbitt concludes, “Summing up the parts, this is probably the weakest employment report of the year for Canada, and confirms that growth is cooling. Yet, despite its many flaws, the report still boasts an overall job increase that would be the envy of any other G7 member and was enough to trim the jobless rate. The report will do nothing to pull the Bank of Canada from the sidelines.”