Unemployment dipped to 6.7% while job gains beat expectations in December

The Canadian economy added 91,000 jobs and the unemployment rate dipped 0.1 percentage points to 6.7 per cent in December, Statistics Canada said on Friday, in a jobs report that came as a pleasant surprise to economists.

Job growth was more than triple the amount expected, with experts guessing on average that 25,000 jobs would be added in the final month of 2024. 

The previous month's unemployment rate had come in at 6.8 per cent, with 51,000 jobs added.

The risks posed by high inflation and high interest rates are "largely behind us," with the economy showing signs of improvement since late last year, said BMO chief economist Doug Porter in an interview with CBC News.

"This is part of that bigger piece. Are we seeing strong growth? No, we're not seeing that yet," he said. "But certainly, we were starting to set the conditions, at least, for what could [be] a better economy in 2025."

Slowing population growth could partly explain the slight dip in a still-elevated unemployment rate, which is measured by how many people are actively looking for work.

"We actually saw more jobs created in December than the number of new entrants in the labour force. But that was a bit of a rarity over the past year," explained Porter.

Most of the jobs added in December were full-time positions, led by gains in educational services, health care and social assistance, finance, and transportation.

The public sector added 40,000 jobs, while private sector growth was little changed, adding 27,000 jobs. The number of self-employed people rose by 24,000, growing for the first time since February.

The average hourly wage rose by 3.8 per cent ($1.32, bringing it to $35.77 per hour) compared to the same period last year, the slowest pace of growth since May 2022.

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"Today's report is clearly better than anticipated, although the unemployment rate is still elevated and indicative of slack within the economy," wrote CIBC senior economist Andrew Grantham in a note to clients.

"We still see the need for further interest rate cuts to fully reduce that excess capacity."

Statistics Canada also highlighted the Canada-U.S. trade relationship in its monthly report, noting that 8.8 per cent of workers were employed in industries that largely rely on U.S. demand for Canadian exports.

Most of those jobs are in Alberta, with the lion's share in industries like oil and gas extraction, pipeline transportation, primary metal manufacturing and transportation equipment manufacturing.