Bank of Canada rate cut in doubt after strong December jobs report
Signs of strength in Canada’s labour market to close out 2024 are fuelling doubts among some Canadian economists about whether the central bank will deliver another interest cut later this month.
A jump in new jobs helped bring the Canadian unemployment rate down a tick to 6.7 per cent in December, according to Statistics Canada.
Canadian employers collectively added some 91,000 net new jobs last month, the agency said, with BMO calling it one of the largest single months of gains in two years.
Job gains were largely in full-time work and broadly based across multiple industries, led by educational services and transportation and warehousing. The public sector saw a jump of 40,000 jobs, while some 27,000 positions were added in private work.
The December unemployment figures compare to a jobless rate of 6.8 per cent in November. Economists had largely expected a slight increase in the unemployment rate to 6.9 per cent.
CIBC senior economist Andrew Grantham said in a note to clients on Friday that the Canadian labour market ended 2024 “with a bang.”
StatCan said the employment rate — the proportion of the population aged 15 and older who are employed — ticked up 0.2 percentage points to 60.8 per cent in December, the first increase since January 2023.
Canada’s employment rate has largely been contracting over the past few years as the economy slows and the Canadian labour force grows faster than the pace of hiring. But StatCan pointed to the recent slowing pace of population growth to contextualize the uptick in the employment rate.
The pace of annual wage growth meanwhile continued to slow in December to 3.8 per cent, down from 4.1 per cent in November and 4.8 per cent in October.
The Bank of Canada has previously
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