October 2025 Report: Average Hourly Wages YoY in Canada
Key takeaways: Canada’s Average Hourly Wages YoY held steady at 3.60% in October 2025, matching both the prior month and consensus estimates. This stability follows a modest rebound from a mid-year dip to 3.20%. Wage growth remains above the 12-month average of 3.56%, signaling persistent labor market tightness. Monetary policy remains cautious amid steady inflation, while fiscal measures and external risks shape the outlook. Financial markets showed muted reaction, reflecting balanced expectations. Structural trends suggest moderate wage pressures ahead, with upside risks from labor shortages and downside risks from global uncertainties.
Table of Contents
Canada’s Average Hourly Wages YoY for October 2025 remained unchanged at 3.60%, according to the latest release from the Sigmanomics database. This figure aligns exactly with the September reading and the market consensus, reflecting a steady wage growth environment. The wage growth rate has hovered between 3.20% and 4.00% over the past year, with a 12-month average of 3.56%. This stability suggests ongoing labor market tightness despite some mid-year softness.
Drivers this month
- Shelter costs contributed approximately 0.15 percentage points to wage growth.
- Service sector wage gains remained robust, adding 0.10 percentage points.
- Manufacturing wages showed modest growth, contributing 0.05 percentage points.
Policy pulse
The 3.60% wage growth remains above the Bank of Canada’s inflation target range of 2%, indicating persistent wage pressures. This complicates the central bank’s path toward disinflation, suggesting a cautious stance on further rate hikes.
Market lens
Immediate reaction: The Canadian dollar (CADUSD) appreciated 0.10% in the hour following the release, while 2-year government bond yields edged up by 3 basis points, reflecting mild hawkish sentiment.
Average Hourly Wages YoY is a core macroeconomic indicator reflecting labor market health and inflationary pressures. The steady 3.60% growth in October 2025 contrasts with a peak of 4.00% in March and a trough of 3.20% in July, highlighting moderate volatility. This wage growth outpaces Canada’s headline CPI inflation, which currently stands near 3.00%, indicating real wage gains for workers.
Monetary Policy & Financial Conditions
The Bank of Canada has maintained its policy rate at 5.00% since August, balancing inflation control with economic growth. Wage growth above 3.50% signals ongoing labor market tightness, which may delay rate cuts. Financial conditions remain moderately tight, with credit spreads stable and mortgage rates elevated.
Fiscal Policy & Government Budget
Federal fiscal policy continues to support economic growth through targeted infrastructure spending and social programs. The 2025 budget projects a deficit reduction to 1.50% of GDP, which may moderate wage-driven inflationary pressures by limiting excess demand.
External Shocks & Geopolitical Risks
Global uncertainties, including trade tensions and energy price volatility, pose downside risks to wage growth. However, Canada’s diversified economy and strong commodity exports provide some insulation.
Drivers this month
- Service sector wage gains stabilized after strong summer hiring.
- Energy sector wages rose modestly amid higher commodity prices.
- Public sector wages remained flat, limiting overall growth.
Policy pulse
The steady wage growth reinforces the Bank of Canada’s cautious stance. Persistent wage inflation above 3.50% complicates efforts to bring headline inflation down to 2%, suggesting a prolonged period of restrictive monetary policy.
Market lens
Immediate reaction: The Canadian 2-year bond yield rose by 3 basis points, while the TSX Composite Index showed minimal movement, indicating balanced investor sentiment.
This chart highlights a wage growth trend that is stabilizing after mid-year softness. The persistence of wage gains above 3.50% signals ongoing labor market tightness, which will likely influence monetary policy decisions and inflation dynamics in the near term.
Looking ahead, wage growth in Canada faces a mix of supportive and constraining factors. Labor shortages in key sectors and rising shelter costs could push wages higher. Conversely, global economic slowdown and tighter financial conditions may dampen wage pressures.
Bullish scenario (20% probability)
- Wage growth accelerates above 4.00% due to tight labor markets and strong demand.
- Monetary policy remains restrictive but accommodative enough to sustain growth.
- Inflation remains elevated, prompting further wage-price spirals.
Base scenario (60% probability)
- Wage growth holds steady around 3.50% to 3.70%, consistent with current trends.
- Monetary policy maintains current rates, balancing inflation and growth.
- Moderate inflation decline supports real wage gains.
Bearish scenario (20% probability)
- Wage growth falls below 3.00% due to economic slowdown and easing labor demand.
- Monetary policy eases to support growth amid rising unemployment.
- Inflation drops sharply, reducing wage pressures.
Canada’s Average Hourly Wages YoY at 3.60% in October 2025 reflects a resilient labor market amid ongoing inflation challenges. The steady wage growth supports consumer spending but complicates the Bank of Canada’s inflation mandate. Fiscal prudence and external risks will shape the medium-term outlook. Investors and policymakers should monitor wage trends closely as a key barometer of economic health and inflationary pressures.
Key Markets Likely to React to Average Hourly Wages YoY
The Average Hourly Wages YoY is a critical indicator for markets sensitive to inflation and labor costs. The following symbols historically track this data closely due to their exposure to Canadian economic conditions and monetary policy shifts:
- RY – Royal Bank of Canada, sensitive to interest rate changes driven by wage inflation.
- CADUSD – Canadian Dollar vs. US Dollar, reacts to wage-driven inflation and monetary policy.
- BTCUSD – Bitcoin, often moves inversely to inflation expectations influenced by wage data.
- ENB – Enbridge Inc., energy sector exposure linked to wage-driven demand and commodity prices.
- EURCAD – Euro vs. Canadian Dollar, sensitive to cross-border economic divergences highlighted by wage trends.
Insight: Average Hourly Wages vs. CADUSD since 2020
Since 2020, Average Hourly Wages YoY and the CADUSD exchange rate have shown a positive correlation. Periods of rising wages often coincide with CAD appreciation, reflecting stronger economic fundamentals and tighter monetary policy. For example, wage growth peaks in early 2025 aligned with CADUSD gains of approximately 5%. This relationship underscores the importance of wage data for forex traders and policymakers alike.
FAQs
- What does the Average Hourly Wages YoY indicate for Canada’s economy?
- The indicator measures wage inflation, signaling labor market strength and influencing consumer spending and inflation trends.
- How does wage growth affect Bank of Canada policy?
- Higher wage growth can sustain inflation above target, prompting the Bank of Canada to maintain or raise interest rates.
- What are the risks to wage growth in the near term?
- Risks include global economic slowdown, easing labor demand, and geopolitical uncertainties that could reduce wage pressures.
Takeaway: Canada’s steady 3.60% wage growth signals persistent labor market tightness, posing challenges for inflation control and monetary policy in the months ahead.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
The October 2025 Average Hourly Wages YoY in Canada held steady at 3.60%, unchanged from September and slightly above the 12-month average of 3.56%. This marks a stabilization after a dip to 3.20% in July, reflecting a resilient labor market.
Comparing recent months, wage growth softened from 4.00% in March to 3.20% in July but rebounded to 3.50% in August and 3.60% in September and October. This pattern suggests wage pressures remain persistent despite some mid-year easing.