Jobless rate falls to lowest in 41 years
Economy added nearly 80,000 jobs two months in a row
The Canadian economy churned out jobs at a better-than-expected pace last month, driving the unemployment rate to a 41-year low and spurring the chances of an interest rate hike, perhaps as soon as this month.
In its monthly report Friday, Statistics Canada said the Canadian economy added almost 80,000 jobs for the second month in a row in December on a surge in part-time employment. The jobless rate fell to 5.7 per cent to reach its lowest mark since comparable data became available in 1976.
The better-than-forecast jobs report leaves next week’s business outlook survey as the last key piece of information ahead of the Bank of Canada’s Jan. 17 rate decision, said BMO senior economist Robert Kavcic.
“If that report flags tightening capacity and broadening labour shortages, the bank may not wait until March,” said Kavcic.
He added that Bank of Canada Governor Stephen Poloz must balance the impact of gathering wage inflation against new federal rules raising the threshold many home buyers must reach to qualify for a mortgage.
Friday’s jobs report “certainly does increase the odds, but not to 100 per cent,” Kavcic said. A 25-point increase would follow two similar hikes last year.
Kavcic said the national economy is already showing worker shortages in hot spots including the GTA, where the jobless rate of 6 per cent stands at a 16-year low.
Manufacturers in the GTA are benefiting from moderate fuel costs along with remaining government economic stimulus measures.
TD senior economist Brian Depratto said the strong jobs report follows robust GDP expansion in the first half of 2017 on upbeat retail spending numbers, with Canadian consumer confidence and jobs creation “feeding off each other.”
Statistics Canada said the December jobs gain was the biggest in a single month since April 2012, when the economy was rebounding out of recession. The largest employment gains were in Quebec and Alberta.
There were more people working in the services-producing sector, led by finance, insurance, real estate, and rental and leasing. Employment also increased in educational services, along with transportation.