The Canadian economy saw a surge in new jobs to close out the year, Statistics Canada said in its latest labour force survey report Friday, but a sharp uptick in illness-related absences limited worker output in December.
The country added 104,000 jobs last month, according to Statistics Canada, dropping the unemployment rate to 5.0 per cent for the month. That’s down from 5.1 per cent in November and sat just above the record low of 4.9 per cent seen in June.
Total hours worked in the month were up 1.4 per cent annually — “little changed” despite the growth in overall employment, Statistics Canada said.
One factor limiting working hours was that some 8.1 per cent of employees were off work due to illness or disability during the agency’s reference period in mid-December. The reports came amid surges of respiratory illness across Canada, with COVID-19, RSV and flu rates putting strain on the country’s health-care system.
The figures for rate of illness-related absences are up from 6.8 per cent in November and the pre-pandemic average of 6.9 per cent seen in December 2017-2019, but still below the record-high of 10.0 per cent seen in January 2022 as the Omicron variant tore through the Canadian labour force.
CIBC Senior Economist Andrew Grantham said in a note to clients Friday morning that the overall strength in hiring could reflect companies adapting to the situation by hiring more staff just to deliver the same level of supply they had before the pandemic.
Average hourly wages were up 5.1 per cent annually, marking the seventh consecutive month wage growth was above five per cent but still failing to keep pace with inflation.
Statistics Canada said youth aged 15 to 24 led the growth with 69,000 jobs added in December, reversing losses from this age group seen in late summer.
The Bank of Canada has been raising interest rates in an effort to reduce demand and tame rampant inflation, with Governor Tiff Macklem identifying the country’s tight labour market as one of the factors keeping the economy hot.
The Bank of Canada signalled after its 50-basis-point move in December that it could pause rate hikes soon and future decisions will be data dependent.
Grantham said that the strong December jobs report fuels arguments for an additional quarter-percentage point increase to the central bank’s benchmark interest rate at its next decision on Jan. 25.
BMO Chief Economist Doug Porter also said Friday’s jobs figures support the call for another 25-basis-point hike later this month.
“Suffice it to say that with wages still running around (5.0 per cent) and the jobless rate holding at (5.0 per cent), the risk is heavily tilted to the need for the Bank to ultimately do even more to quell underlying inflation pressure,” he wrote.
Friday also marked the release of jobs figures in the United States. Employers in the U.S. added a solid 223,000 jobs in December, evidence that the economy remains healthy yet also a sign that the Federal Reserve may still have to raise interest rates aggressively to slow growth and cool inflation.
The December job growth, though a decent gain, amounted to the lowest monthly increase in two years. The unemployment rate remained fell to 3.5 per cent, matching a 53-year low, the Labor Department said Friday.
— with files from the Associated Press