By Ketki Saxena
Investing.com – The Canadian economy added 104,000 positions in December, including 84,500 full-time and 19,5000 part-time jobs, smashing expectations for a gain of total 5,000 positions.
The unemployment rate dropped to 5% from 5.1% in November, just above June’s record low. The participation rate meanwhile rose to 65% (up 0.2%. Total hours worked were up 0.1% month-on-month, although wage growth slowed and remained well behind inflation - up 5.1% year over year, down from 5.6% in November.
James Orlando, CFA, Director at TD (TSX:TD) economics notes today’s report as an “incredibly positive print” and an “impressive report” capping off a “banner year for the Canadian labour market”. He notes that “most of the gains were full-time positions in the private sector and spanned many industries further supporting the robustness of today's numbers.”
Douglas Porter, Chief Economist and Managing Director at BMO (TSX:BMO) writes in a similar vein, noting that today’s blockbuster report shows “precisely zero hint of” a cooldown in labour markets, and increases the odds of a rate hike from the Bank of Canada later this month.
Porter is calling for a 25 bp rise to 4.5% “and then a move to the sidelines to reassess.”
Looking ahead into 2023, he expects the labour market to slow this year and unemployment to rise, as the Bank of Canada’s 400 bps of interest rate hikes in 2022 trickle through the economy - “ although the current excess of job openings and the shortage of workers will limit near-term layoffs.”
Economists at Desjardins are also amongst those calling for a 25 bps move from the Bank of Canada later this month, given “the apparent strength in hiring”.
Unlike economists at BMO and TD, Marc Desormeaux, Principal Economist believes that “the results weren’t strong across the board” and did in fact indicate signs of softening.
“More softness in hours worked, at least partly because of worker absences due to illness, paints a picture of an economy that requires more workers to produce the same amount of goods and services. The further deceleration in permanent employee wage gains also suggests some moderation in inflationary pressures, though these remain too high for the Bank of Canada’s comfort.”