OTTAWA (Reuters) – Canada’s economy added a net 100 jobs in December and the jobless rate remained at 5.8%, but permanent employees’ wages increased at the fastest pace in two years, data showed on Friday.
Analysts polled by Reuters had forecast a net gain of 13,500 jobs and the unemployment rate to tick up to 5.9% from 5.8% in November.
The average hourly wage growth for permanent employees – a figure closely watched by the central bank – accelerated to an annual rate of 5.7% in December from 5.0% in November, Statistics Canada said. That was the highest growth rate since the 5.7% recorded in January 2021.
The Bank of Canada (BoC) has said wage growth in the 4% to 5% range would hinder its efforts to sufficiently cool inflation.
Wage growth in Canada has remained strong even though job growth has eased in recent months as the economy slows under the impact of the BoC’s 10 rate hikes between March 2022 and July 2023.
The BoC has left its key policy rate on hold at a 22-year high of 5% since July as it weighs whether rates are high enough to bring inflation back to a 2% target.
But with inflation slowly ticking down an unexpected contraction in third-quarter gross domestic product, money markets and economists expect the bank to start cutting rates in the first half of 2024.
Canada’s economy averaged 23,000 monthly employment growth in the last six months of 2023, compared with an average of 48,000 per month in the first half of last year, Statscan said.
In December, employment in the goods sector decreased by a net 42,900 jobs, driven by job losses in manufacturing, agriculture and construction.
Those losses were balanced out by a net 43,100 positions gained in services sector, led by increases in the professional, scientific and technical services as well as health care and social assistance.
The central bank’s next rate announcement is on Jan. 24, after the release of December inflation data on Jan. 21.
BoC Governor Tiff Macklem, in an interview with BNN TV last month, said the bank could start cutting rates in 2024 as long as core inflation comes down as predicted.
(Reporting by Ismail Shakil in Ottawa; Editing by Dale Smith)
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