The Canadian labour market once again kept managers, investors and, most important, the Bank of Canada on edge as it added 104,000 net jobs in December, significantly higher than the forecast of 5,000.
December was the second month in the last three that job gains exceeded 100,000. The abnormally strong increase reported by Statistics Canada on Friday might reflect some distortions from seasonal factors because of the impact of the pandemic.
Still, that did not take anything away from the fact that the labour market remained strong, despite recession concerns.
Most of the gains came from full-time workers, a sign that the strong increase was by no means an accident.
The service sector continued to drive job growth, netting 81,700 new jobs on the month, while the manufacturing sector added a surprisingly robust 22,000 jobs.
The unemployment rate fell to 5.0%, just above the all-time low of 4.9% in July.
Workers return
Other factors were at play, including the comeback of workers who had been on the sidelines. The labour force participation rate increased by 0.2 percentage points to 65.0% as close to 200,000 workers joined the labour force in December.
That helped to push wage growth down to 5.2% compared to a year ago, an encouraging yet elevated number.
Now the pressure will once again fall on the Bank of Canada and its decision of whether to slow down rate increases as it reassesses the impact of the labour market on inflation and the economy.
Before the report came out, the consensus had pointed to a 25 basis-point hike in January, a step down from the 50-point hike in December. But with the release of such a hot jobs report, that task became much more complicated.
Underneath the top-line figure, construction posted the largest gain at 35,000 jobs on the month, followed by transportation and warehousing at 29,300, and information, culture and recreation at 25,000.
