The Canadian labour market ended 2024 on a very strong note, adding 90.9k positions in December, primarily in full-time positions (+57.5k).
The healthy job gain pushed the unemployment rate down 0.1 percentage point to 6.7%. The labour force participation rate was unchanged at 65.1%.
Employment by sector showed widespread gains, led by educational services (+17k), transportation and warehousing (+17k), finance, insurance, real estate, rental and leasing (+16k), and health care and social assistance (+16k).
Lastly, total hours worked jumped a massive 0.5% month-on-month, pointing to solid economic growth on the month. Meanwhile wages were up a more palatable 3.8% year-on-year (from 4.1% in November).
Key Implications
This was as positive a labour market report as we could expect. Despite all the negative talk on Canada’s economy, the country keeps adding jobs. Importantly, these jobs were largely full-time, and in cyclically sensitive industries. The growth in hours worked was also encouraging, as this will help support the continued resurgence in consumer spending. Wage growth has also been moving towards the level that is consistent with inflation stabilizing around the Bank of Canada’s 2% target.
Today’s report puts a January rate cut into question. Despite fears related to U.S. action against Canada, the BoC doesn’t make political calls on the outlook. However, post inauguration on January 20th, they may have sufficient information on whether lower interest rates are necessary to shore up the economy. This will need to be balanced against any reaction on the Canadian dollar, that might also be providing a buffer on trade at that time.
