By Ismail Shakil
OTTAWA (Reuters) – Canada’s economy added nearly quadruple the number of jobs forecasted for December and the unemployment rate surprisingly ticked down to 6.7%, data showed on Friday, giving the central bank breathing room to determine the pace of further rate cuts.
The economy added a net 90,900 jobs last month, largely full-time work, according to Statistics Canada data. The job gains – third time in the past four months – were spread across several industries, the agency said.
Analysts polled by Reuters had forecast a net gain of 25,000 jobs and that the unemployment rate would rise to 6.9% from the near eight year high of 6.8% in November. In December, the unemployment rate fell for core-aged men and for men aged 55 and older.
The robust jobs data show the economy ended the fourth quarter on a high note, easing the pressure on the Bank of Canada to continue rapid rate cuts to spur growth.
The central bank slashed its key policy rate by 50 basis points last month to help address soft economic growth, bringing the cumulative lowering of the borrowing rate to 175 bps since June.
The bank, however, did indicate further rate cuts would be more gradual. Its next rate announcement is on Jan. 29, when money markets see a roughly 70% chance of a 25 bp cut.
The average hourly wage growth for permanent employees slowed to an annual rate of 3.7% from 3.9% in November, Statistics Canada said. The closely-watched wage growth rate was the slowest since April 2022.
In further sign of the job market firming up, Canada’s employment rate, or the proportion of the population who are employed, increased for the first since January 2023 percentage.
Employment in the goods sector increased by a net 22,500 jobs, mostly in manufacturing. The services sector gained a net 68,400 jobs, led by educational services and transportation and warehousing.
Canada’s economic growth prospects have in recent months been clouded by the threat of tariffs from incoming U.S. President Donald Trump. On Friday, the statistics agency noted that 8.8% of Canadian workers, or around 1.8 million people, in 2024 were in industries that were dependent on U.S. demand for Canadian exports.