Statistics Canada released data on Canada’s labour market last Friday. The data showed some improvement in the labour market during December, as job growth topped expectations and the unemployment rate declined. The story was much the same in the US. Relatively strong labour markets have helped growth across North America. However, the implementation of broad-based tariffs could negatively impact labour markets.

• The Canadian economy added 90,900 jobs in December, which topped the 25,000 estimated by economists, based on a Bloomberg survey. This was the highest number of job gains in a month since January 2023.
• The economy added both full- and part-time jobs over the month. Strong job gains were seen in the finance, health care and education industries. Conversely, the retail and wholesale trade industry lost jobs.
• Canada’s unemployment rate declined to 6.7% in December from 6.8% in the previous month. This was the first drop since September 2024.
• Markets have asked how this data might impact the Bank of Canada’s (BoC) upcoming rate decision. The stronger-than-expected labour market has left investors wondering if the BoC will hold steady at its next meeting. Still, the BoC is expected to lower interest rates further over 2025.
• In the US, the economy added 256,000 jobs in December, which helped push the unemployment rate down to 4.1%.

Canadian and US labour markets began to slow in 2024, but data shows that they ended the year in a relatively strong position. Canada’s labour market remains tight, which has helped prop up the Canadian consumer despite restrictive financial conditions. Canada’s inflation rate for December will be released on January 21, after which markets’ attention will turn to the BoC, which makes its next interest-rate announcement on January 29.

If you would like to discuss this economic and market update or have questions about your finances and investments, please feel free to contact me anytime.