OTTAWA — Canada’s unemployment rate fell to 5.7 per cent last month, marking the first decline since December 2022, Statistics Canada reported recently.
The agency’s labour force survey said the economy added 37,000 jobs in January after several months of relatively no change in employment.
Canada’s labour market cooled significantly last year as high interest rates weighed on consumer spending and business investment, pushing up the unemployment rate from 5.1 per cent in April to 5.8 per cent in December.
While the job gains were concentrated in part-time work, the total increase in employment exceeded forecasters’ expectations, suggesting the central bank isn’t facing pressure to cut rates right now.
“Today’s data suggest that the bank won’t be in a rush to cut interest rates, and we maintain our expectation for a first move in June,” wrote Andrew Grantham, CIBC’s executive director of economics.
Although CIBC is not changing its forecast on timing for the first rate cut, it now expects the Bank of Canada will cut its key rate by less overall this year.
Employment rose across several sectors in January, led by wholesale and retail trade as well as finance, insurance, real estate, rental and leasing.
Meanwhile, accommodation and food services saw the largest decline in employment.
Workers’ wages continued to grow rapidly last month as Canadians seek compensation for past inflation. Average hourly wages, which have been consistently growing at a four to five per cent annual pace, rose 5.3 per cent from a year ago.
Statistics Canada says wage growth has been stronger for women and high-income earners. Although men continue to earn more than women on average, average hourly wages for women rose 6.2 per cent compared with 4.4 per cent for men.
For employees in the top 25 per cent of the wage distribution, their wages grew 5.9 per cent compared with 4.6 per cent for those in the bottom 25 per cent.
Canada’s labour market has been supported by strong population growth, driven by permanent and temporary immigration.
Compared with a year ago, the economy added 345,000 jobs, while the working-age population expanded by one million people.
As the Bank of Canada maintains its key interest rate at five per cent, economists’ forecasts suggest unemployment will rise throughout this year.
©2024 The Canadian Press
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