By RACHELLE YOUNGLAI
Saturday, January 6, 2018
Canada's jobless rate sank to its lowest level in four decades in December, capping a remarkable year of employment growth that defied expectations month after month.
The latest report was no exception with the addition of 79,000 net new positions. That boosted the total number of jobs created last year to 423,000, for a labour market performance that was described as "spectacular," "impressive," "blockbuster" and "unbelievable."
"Canadian job markets have been going from strength to strength," Brian DePratto, senior economist with Toronto-Dominion bank, said in a note.
The robust jobs report sent the loonie up one cent to 80.89 U.S. and raised expectations that the Bank of Canada would hike interest rates at its policy meeting Jan. 17. The odds of a rate hike occurring this month jumped to 80 per cent from 40 per cent, according to Bloomberg's interest-rate prediction tool. Last year, the Bank of Canada raised its key lending rate twice, to 1 per cent, due to the strengthening economy.
The bulk of the jobs created last year was full time and the unemployment rate dropped from 5.9 per cent to 5.7 per cent, the lowest since comparable data became available in 1976, Statistics Canada said in its monthly labour survey on Friday.
Average hourly earnings rose 2.7 per cent, to $26.68, over the year, a positive development for Canadians' paycheques.
For most of the year, wage growth had stalled. That trend started reversing over the summer and now earnings growth has remained above 2 per cent since the September period. "It has definitely been encouraging," said Josh Nye, economist with Royal Bank of Canada.
With the jobless rate at a 41year low and job creation the fastest in 15 years, Mr. Nye said: "You would probably think we should be seeing something above 3 per cent given those conditions. ... We should see wage growth trending higher."
Some of the provinces topped the national level. In Prince Edward Island, the average hourly wage jumped 6.8 per cent over the year. British Columbia, one of the country's strongest regional economies, recorded wage growth of 4.3 per cent, followed by Alberta at 3.2 per cent. Significant hikes in the mandatory minimum wage in Alberta and Ontario are expected to help drive pay increases this year.
Although Statistic Canada's labour-force survey is not always reliable and has a huge margin of error, economists said all signs pointed to a strong labour market. "There are trends here that are just undeniable," said Douglas Porter, chief economist with Bank of Montreal.
The jobless rate declined steadily over the year. Fulltime employment increased by 394,000 positions or 2.7 per cent. Employment for core-age workers - those between the age of 25 and 54, and the most critical part of the labour market - expanded by 1.6 per cent.
In Ontario, the country's most populated province, employment rose by 2.5 per cent, more than double the growth in the previous two years, said Statscan. In Quebec, employment grew by 2.1 per cent and its jobless rate also hit a four-decade low.
Finance and real estate, as well as high-paid positions in professional, scientific and technical services, were responsible for about one-quarter of all jobs created last year.
Manufacturing added about 86,000 spots and construction gained 51,000 positions. Natural resources, which has shed thousands of jobs due to the commodities downturn, rebounded slightly with 15,000 new spots.
Over all, December represented the second consecutive month where employers created nearly 80,000 new positions.
"The numbers are spectacular but I think we would be hard pressed to come close to matching them in 2018," said Mr. Porter, though he added that the jobless rate could continue to fall, perhaps to a level below 5 per cent. "That is something many, many of us have not seen in our lifetime," he said.