Canada’s unemployment rate remained at 5.8% in December, adding only 100 net jobs, according to data compiled by Reuters.
While permanent employees’ wages did increase at the fastest pace in three years, bringing the average hourly wage growth rate from 5% to 5.7%, analysts polled by Reuters had predicted a net gain of 13,500 jobs for the month of December.
The Bank of Canada hiked rates ten times between March 2022 and July 2023, keeping job growth slow but forcing wage growth up.
“The main story here is we are seeing some cool down in the job market,” Doug Porter, chief economist at BMO Capital Markets, told the Globe Mail. “The one disturbing aspect for the bank is that average hourly wages took a big step up in the month.”
The Bank of Canada factors in employment and wage growth when it makes decisions around inflation rates. Wage growth around 4%-5% or higher, would stagnate the central bank’s efforts to bring inflation rates down.
The Canadian dollar also dropped to its lowest point in over two weeks, being worth only US$0.74, according to the data, while simultaneously the U.S. added more employees to their economy than predicted.
An average of 23,000 new employees were added monthly over the last six months in 2023, far less than the average of 48,000 per month in the first half of 2023.
Employment in the goods sector decreased by a net of 42,900 jobs last month, particularly in the areas of manufacturing, agriculture and construction.
Losses in the goods sector were balanced out by a gain in the service sector, which saw a net increase of 43,100 jobs in scientific and technical services, as well as social assistance and healthcare.
The Bank of Canada will release its data on December inflation on Jan. 21 and make its next rate announcement on Jan. 24.
