Canada’s economy added 104,000 jobs in December as the unemployment rate fell slightly to 5.0 per cent, Statistics Canada said Friday.
This marks the third decline in the unemployment rate in fourth months, edging it closer to the record low of 4.9 per cent reached in June and July.
In its latest labour force survey, the federal agency says the rise in employment was driven by an increase in full-time work.
The number was much higher than economists had forecast, “blowing way past consensus expectations for a paltry [5,000] gain,” Andrew Grantham, a senior economist at CIBC, said in a note.
The number of employees in the private sector increased last month, with job gains made across industries.
Meanwhile, employment in the public sector held steady.
Strong reading could mean another rate hike
The construction industry made notable gains last month, with job numbers rising by 2.3 per cent, up from a previous decrease.
Jobs in the transportation and warehousing sector increased by 3.0 per cent, reversing losses suffered in September and marking its first notable gain since November 2021, the report said.
The number of jobs in the professional, scientific and technical services industry rose by 1.3 per cent, continuing an upward trend that began during the summer of 2020.
Similar to the previous month, December’s employment gain wasn’t reflected in working hours. That’s due to an increase in staff absenteeism due to illness, Grantham said.
“The strength in hiring therefore partly appears to be a reflection of companies having to retain more staff in order to obtain the same level of supply.”
The strong reading could mean that the Bank of Canada will issue another 25 basis point interest rate hike in January, Grantham said.
Wages still lagging behind inflation rate
Wages continued to grow at a year-over-year pace above 5.0 per cent for the seventh consecutive month, with wages up 5.1 per cent.
That growth, however, still lags behind the country’s inflation rate, which was 6.8 per cent in November.
Employment among youth aged 15 to 24 rose in December, fully recouping job losses experienced between July and September.
The jobs report also noted that the employment rate among women between the ages of 25 and 54 reached a record-high last month.
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The Bank of Canada has previously flagged the country’s tight labour market as a contributor to high inflation.
The central bank has raised interest rates aggressively in hopes of bringing down the pace of price growth and cooling the economy.
While economists expect unemployment to rise in response to higher borrowing costs, the labour market has remained resilient over recent months.