Canada's job gains smash expectations and unemployment rate drops

Canada added far more jobs than expected in December, defying concerns about the state of the economy and helping to push the unemployment rate down to 6.7 per cent.

The economy gained 91,000 jobs, with 40,000 coming in the public sector, 27,000 in the private sector and 24,000 from self-employment, according to figures released Friday by Statistics Canada. Of the new positions, 56,000 were categorized as full-time.

It was the third positive jobs reading in four months, and marked the highest single-month increase since January 2023, when the economy added 150,000 jobs. The increase in self-employment was the first since February of 2024.

The data beat expectations set by most economists, who were expecting the jobless rate to rise to 6.9 per cent with a more modest gain of 25,000 jobs.

“This was as positive a labour market report as we could expect,” said James Orlando, senior economist with Toronto-Dominion Bank, in a note to clients. “Despite all the negative talk on Canada’s economy, the country keeps adding jobs.”

The December gains drove the unemployment rate down from 6.8 per cent a month earlier, though it remains a full percentage point higher than last year.

“The Canadian job market ended 2024 on an upbeat note, in line with our view that the broader economy was getting up off the mat,” said Douglas Porter, chief economist at the Bank of Montreal, in a note to clients. “Having said that, the Labour Force Survey is notoriously volatile, and we certainly can’t pin too much on a single reading.”

The Bank of Canada has signalled a more gradual pace of cuts to its policy rate this year. The policy rate currently sits at 3.25 per cent, with economists still forecasting it will fall closer to two per cent by the end of the year. Still, the 25 per-cent tariff threat on all Canadian goods from the incoming U.S. administration, remains the source of greatest uncertainty for the central bank and may reinforce the rationale to cut at its Jan. 29 meeting.

“Nothing here to shift the bank away from rate cuts, even if the pace is slowing (odds of a January rate cut fell a touch to 70 per cent from 80 per cent, though two cuts are still priced in for all of 2025),” said David Rosenberg, founder and president of Rosenberg Research Inc., in a note.

Job gains were led by industries such as educational services, transportation and warehousing, financial and real estate services and healthcare and social assistance.

On a year-over-year basis, public sector employment was up by 156,000 jobs and private sector employment was up 191,000 jobs. For the year, the public sector grew at a rate of 3.7 per cent while the private sector grew at 1.4 per cent.

Over the past 12 months, growth in healthcare and social assistance and educational services accounted for nearly half the employment gains.

Overall, the labour market ended 2024 with 413,000 more people working in December than the year before.

The employment rate rose to 60.8 per cent, the first increase since January 2023. Statistics Canada attributed the rise in the employment rate to slower population growth in the second half of 2024. On a year-over-year basis, the employment rate was down 0.9 per cent compared to the year before.

The youth unemployment rate rose by 0.5 per cent during the month to 14.4 per cent. The youth jobless rate has gained 1.6 percentage points in November and December, nearly erasing the declines in September and October.

Average hourly wages rose 3.8 per cent on a year-over-year basis, after growing by 4.1 per cent in November. In December, hourly wage growth was at its slowest pace since May 2022.

Given the tariff threats from the incoming Trump administration, Statistics Canada noted around 1.8 million people worked in industries where 35 per cent or more of jobs depend on U.S. demand for Canadian exports. The industries with the most jobs dependent on U.S. demand include oil and gas extraction, pipeline transportation, primary metal manufacturing and transportation equipment manufacturing.

? Email: jgowling@postmedia.com

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