MNI: Canada Has Fourth Straight Month Of Job Strength

Canada's growth market rang up a fourth straight month of unexpected strength in December, recovering from weakness earlier this year as the U.S. imposed tariffs that slowed annual hiring growth to the worst in a decade excluding the pandemic. 

Employment rose 8,200 compared with an MNI economist survey calling for a decline of 10,000 positions, adding to gains of about 180,000 over the prior three months. The net gain also came from 50,200 more higher-paying full-time jobs while part-time declined 42,000. 

The jobless rate climbed to 6.8% from 6.5% in November, but remained lower than the October reading of 6.9%. Economists predicted a 6.6% rate. Unemployment climbed because the hiring gain lagged the 81,000 rise in the labor force. 

Hiring gains for the 12 months ending in December came in at about 226,000 for a rise of 1.1%, the slowest since 2015 excluding the pandemic according to Statistics Canada data published Friday. Employment stalled from January to August as trade tensions with the U.S. escalated, the agency said. 

Hours worked, which some economists see as a proxy for GDP, rose a modest 0.3% in December from a year ago. The Bank of Canada predicts modest output growth of about 1% this year and cited weaker labor markets as it cut rates four times in 2025 before saying it intended to pause. Governor Tiff Macklem has said the trade dispute represents a shock to the level of GDP and while the Bank can help with the adjustment fiscal policy is better placed to assist industries like autos and steel facing high tariffs.

Donald Trump has introduced new uncertainty by seeking to open up Venezuela's oil industry, a potential competitor to Alberta's heavy crude over the long term. The U.S. president's officials have also suggested taking control of Greenland, casting a shadow over North American free talks due to resume in coming weeks.

The Bank of Canada mainly tracks the job market as an indicator of slack and has a mandate to keep inflation at 2%. It can seek higher employment when the inflation mandate is being met. Assessing balance in the job market is clouded by the government's move to curb record immigration that pushed labor supply ahead of demand, partly because it's unclear exactly what will happen to population growth.

Another expected drag on job growth is Prime Minister Mark Carney’s order to cut federal payrolls by 10% over the next few years.