OTTAWA—Despite strong population growth, Canada experienced flat hiring last month, resulting in the country’s jobless rate remaining steady. This suggests that the labor market continues to loosen, which could pose challenges for the central bank.
However, the central bank might find some solace in the fact that wages have seen the strongest rise in almost three years.
According to Statistics Canada’s report on Friday, the number of working-aged individuals employed in Canada remained virtually unchanged in December compared to the previous month. The unemployment rate also held firm at 5.8%. These figures fell short of market expectations, which anticipated the addition of a modest 15,000 jobs and a slightly higher unemployment rate of 5.9%.
Throughout the year, the rate of employment in the country declined steadily. Moreover, the jobless rate had increased in five of the last seven months leading up to November, rising from its record low of 4.9% observed in mid-2022.
In recent months, hiring has struggled to keep pace with Canada’s growing labor force due to a slowdown in economic growth.
In the second half of 2023, employment growth averaged 23,000 jobs per month—an amount that is slightly less than half of the monthly average in the first half. On the other hand, the population aged 15 and older increased by 75,000 in December and had an average monthly growth of about 79,000 for the year. Consequently, the proportion of the working-age population who are employed experienced its fifth decline in the last six months, dropping by 0.2 percentage points to 61.6% last month.
Despite stagnant unemployment numbers for the latest month, there was a loss of 23,500 full-time jobs. However, this was roughly offset by the addition of 23,600 part-time positions, as reported by the data agency. In December, there were 1.2 million unemployed individuals in Canada, reflecting a 19.3% increase compared to the previous year.
Canadian Unemployment Rate Holds Steady at 4.7%
According to the U.S. Labor Department, Canada’s unemployment rate remained stable at 4.7% in December. Meanwhile, the U.S. experienced an increase in hiring with the addition of 216,000 jobs, while the unemployment rate held at 3.7%.
Bank of Canada’s Concerns on Wage Growth
The Bank of Canada has expressed concerns about stagnant wage growth. Therefore, it may find the 5.7% surge in average hourly wages for permanent employees quite worrisome. This increase marks the largest annual growth since January 2021. The central bank, which will make its next interest rate decision on January 24, hopes to find evidence that its previous aggressive rate hikes have been effective in curbing inflation. However, it also anticipates that economic growth will remain subdued in the near term, following a contraction in the third quarter of the year.
Positive Growth in Total Hours Worked
Statistics Canada reported a 0.4% month-on-month increase in total hours worked, marking a 1.7% rise compared to the previous year.
Slight Decline in Labor Force Participation Rate
Despite minimal employment growth and an unchanged unemployment rate from the previous month, the labor-force participation rate decreased by 0.2 percentage points to 65.4%. This decline can be attributed to a drop in the youth participation rate, as it fell from its peak of 65.7% in June.
Changes in Employment Sectors
The number of self-employed individuals decreased in the past month, while both public- and private-sector employees experienced modest growth.
According to the agency’s survey, employment saw an increase in professional, scientific, and technical services, which had shown little change in the previous three months. The healthcare and social assistance sectors also experienced growth. Conversely, there was a continued decline in jobs within the wholesale and retail trade industry for the third consecutive month.