Canada’s jobs report for December exceeded expectations in several ways, a credit to a resilient economy poised to grow as more rate cuts are expected from the Bank of Canada.
The economy added 91,000 jobs, and the unemployment rate dropped 0.1 percentage points to 6.7 per cent. The employment rate rose 0.2 percentage points to 60.8 per cent, the first increase since January 2023.
Average hourly wages rose 3.8 per cent on a yearly basis, down from 4.1 per cent in November and substantially lower than the five per cent trend that persisted for a long time.
It is possible that the jumbo rate cuts late last year encouraged some employers to begin hiring again.
Even as wage growth still hovers above inflation, the gap is narrowing—which indicates the cool job market, with slowed hiring, finally showed up in wages. This will give the Bank of Canada more confidence of continued price stability to cut interest rates this month.
While December’s job report was positive news for the Bank of Canada, the economy remains in excess supply.
Looking ahead, as price stability has been restored, more rate cuts are expected in the upcoming months to further boost growth. These anticipated rate cuts through the winter and spring should bring the policy rate down to 2.75 per cent.
Some gains, especially among part-time jobs, could be due to seasonality as hiring often ticks up during the holiday season. Overall, the numbers reflect a resilient economy that is reviving with easing monetary policy—which encourages borrowing, spending and investments.
The economy added 56,000 full-time jobs and 33,500 part-time jobs. Job gains were spread across the public (40,000) and private (27,000) sectors, while the number of self-employed people rose by 24,000—the first increase since last February.
Both the goods- and services-producing sectors had gains, adding 22,500 and 68,400 jobs respectively.
The largest gains came from:
- Educational services (17,000).
- Transportation and warehousing (17,000).
- Finance, insurance, real estate, rental and leasing (16,000).
- Health care and social assistance (16,000).
Still, risks remain, particularly with the prospect of tariffs from the United States affecting the growth and recovery outlook. Last year, 8.8 per cent of workers were in industries that were dependent on U.S. demand for Canadian exports, particularly in oil and gas extraction, pipeline transportation and manufacturing.
Since Canada and the United States share a long-standing, deeply intertwined trade relationship, trade policy uncertainty could cloud the employment outlook, especially for energy and manufacturing.
