(Bloomberg) — Canadian employment grew for a fourth straight month, and the robust gains bolster the case for the Bank of Canada to deliver another rate hike later this month.
(Bloomberg) — Canadian employment grew for a fourth straight month, and the robust gains bolster the case for the Bank of Canada to deliver another rate hike later this month.
The economy added 104,000 jobs in December, while the unemployment rate fell to near a record low of 5%, as youth and private-sector employment grew, Statistics Canada reported Friday in Ottawa. The gains beat expectations for a small increase of 5,000 positions and a jobless rate of 5.2%, according to the median estimates in a Bloomberg survey.
The monthly figures extend a rebound from a summer slump in employment. There were 130,000 more Canadians working in December than the previous employment peak in May, and strong demand for workers is showing up in paychecks, with average hourly wages up 5.1% from a year earlier. It’s the seventh straight month of increases over 5%.
The Canadian dollar jumped and benchmark government debt dipped. The loonie traded as high as C$1.3546 per US dollar, while the 2-year yield rose to 4.079% at 8:52 a.m. Ottawa time, up about 4 basis points from Thursday’s close.Â
The employment and wage gains add to a string of stronger-than-expected data that may prompt the central bank’s policymakers to raise interest rates at their next decision on Jan. 25 as the economy shows little signs of stalling at the end of last year.
Underlying inflation pressures in November trended higher, and early estimates suggest the economy is on track to expand at an annualized rate of 1.2% in the last quarter of 2022 — more than double the Bank of Canada’s forecast.
Canada’s economy is being helped by resilient growth in the US, where nonfarm payroll employment rose by 223,000 in December and the unemployment rate fell to 3.5%, matching a five-decade low, a Labor Department report showed Friday.Â
Younger Workers
The biggest employment increase in Canada was concentrated in the youngest cohort of workers, fully recouping summertime losses.
Governor Tiff Macklem and his officials have slowed down the pace of rate hikes and signaled that future decisions will depend on economic data. The central bank has already raised borrowing costs by 4 percentage points since March, bringing the benchmark overnight rate to 4.25%.
Before the jobs release, the majority of economists expected a pause on rate hikes later this month, while trading in overnight swaps placed the odds of a 25 basis-point increase at just under two-thirds.
In December, total hours worked were little changed on a monthly basis, and up 1.4% compared to a year earlier.
The participation rate increased 0.2 percentage points to 65.0%, as the labor force grew by 91,000, or 0.4%.
Employment increased in six provinces, including Ontario, Alberta and British Columbia, and was up in construction, transportation and warehousing, recreation, scientific and technical services, and accommodation and food services.
(Adds detail on US payroll report, updates market reaction)
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