Canada’s labour market roared back to life in December, shaking off two subpar months and capping what was one of the best years for job creation since the financial crisis.
During the month, more than 35,000 jobs were created and the unemployment rate dropped to 5.6 per cent from 5.9 per cent, Statistics Canada said Friday in its Labour Force Survey (LFS). The entirety of the gain was in full-time employment, while the private sector broke out of a funk, adding about 57,000 jobs in December.
The domestic labour market had been closely watched of late, particularly after November’s LFS, when about 71,000 jobs were lost, the worst month in more than a decade.
Those results, along with other tepid data, had raised some concerns about the health of the Canadian economy heading into 2020. This has led some experts to believe that the Bank of Canada could be forced to cut interest rates soon, despite elevated debt at the household level.
Instead, December’s LFS offered something of a reprieve, along with a return to form for a labour market that was a stellar component of the domestic economy for much of 2019.
“This employment report will allow the Bank of Canada to breathe easier, as it finishes 2019 on a solid note, and undoes some of the outsized weakness seen in the prior two months,” said Robert Kavcic, senior economist at Bank of Montreal, in a client note.
At the provincial level, Ontario led the way with roughly 25,000 jobs added in the month, with the largest increase in the construction industry. Quebec, which was hit particularly hard in November, saw 21,000 jobs added, with notable gains in the accommodation and food-services and manufacturing industries.
Meantime, average hourly wages grew 3.6 per cent from a year earlier, slowing from November’s 4.5-per-cent pace.
With December in the books, 2019 wound up being one of Canada’s top years for job creation since the global recession. Over the year, roughly 320,000 jobs were created, the second-largest annual gain since 2007. Full-time work accounted for most of the increase, with 282,800 positions added.
It was a standout year for Ontario, in particular. The province added 243,000 jobs during the year, amounting to a 3.3-per-cent increase, its largest since 1987. Quebec finished next highest, with nearly 63,000 jobs added in 2019.
But other parts of the country had a rougher time. Employment edged lower in Alberta, with 4,200 positions lost over the year, while Newfoundland and Labrador fared worst, with close to 6,000 job losses. Employment was essentially unchanged in British Columbia, Manitoba and Saskatchewan.
There was also a sharp divide between the goods and services sectors. The latter accounted for the entirety of 2019’s job increase, at 367,300 positions added, while the goods-producing sector lost close to 50,000 jobs. Within goods, manufacturing (-40,100 jobs), natural resources (-28,800) and utilities (-14,900) all suffered losses, although construction employment jumped by close to 30,000 positions.
While the labour market is heading into 2020 on a better note, a similar pace of hiring as in 2019 may be difficult to sustain.
“[G]iven the sluggish pace of economic growth seen towards the end of last year, leaving employment growth still outpacing [gross domestic product], we see scope for some softer job gains in the coming months, which will keep our forecast for an interest-rate cut alive,” said Andrew Grantham, senior economist at Canadian Imperial Bank of Commerce, in a note.
Indeed, CIBC says fourth quarter GDP is tracking toward an annualized expansion of 0.5 per cent, while other banks are projecting similar lukewarm growth. CIBC suspects this economic climate will result in the BoC cutting interest rates in April.
BMO’s Mr. Kavcic said that, despite December’s job gain, employment growth was still considerably weaker during the final six months of 2019, “and we suspect that gains in 2020 will look more like the second half of 2019 than the first.”
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