Canada Sees Surprising Job Growth as Unemployment Rate Falls

Canada Surpasses Job Growth Expectations, Unemployment Rate Falls to 6.7%

Canada defied economic concerns in December, adding an impressive 91,000 jobs, according to Statistics Canada data released Friday. The surge in employment significantly outpaced economists’ forecasts, which anticipated a more modest gain of 25,000 jobs and a rise in the unemployment rate to 6.9%. Instead, the jobless rate dropped to 6.7%, bolstered by robust hiring across sectors.

The December job gains included 40,000 positions in the public sector, 27,000 in the private sector, and 24,000 from self-employment—the first rise in self-employment since February 2024. Full-time positions accounted for 56,000 of the new jobs, marking a strong end to 2024.

“This was as positive a labour market report as we could expect,” said James Orlando, senior economist at Toronto-Dominion Bank. “Despite all the negative talk on Canada’s economy, the country keeps adding jobs.”

December’s increase marked the third positive monthly jobs report in four months and the largest single-month gain since January 2023, when 150,000 jobs were added. However, the unemployment rate remains one percentage point higher than a year ago.

Douglas Porter, chief economist at the Bank of Montreal, highlighted the report’s encouraging signs while cautioning against over-reliance on one month’s data. “The Canadian job market ended 2024 on an upbeat note,” he said. “Having said that, the Labour Force Survey is notoriously volatile, and we certainly can’t pin too much on a single reading.”

Industry Highlights

The employment boost was led by educational services, transportation and warehousing, financial and real estate services, and healthcare and social assistance. Year-over-year, public sector employment rose by 156,000 jobs (up 3.7%), while the private sector grew by 191,000 jobs (up 1.4%). Healthcare and educational services together accounted for nearly half of the year’s employment gains.

The youth unemployment rate, however, rose by 0.5% to 14.4% in December, erasing gains made earlier in the year. Meanwhile, average hourly wages grew 3.8% year-over-year, the slowest pace since May 2022.

Economic Context

The strong job market contrasts with uncertainty in broader economic conditions. The Bank of Canada has signaled a gradual pace for rate cuts in 2025, with the policy rate currently at 3.25%. Economists predict the rate will fall closer to 2% by year-end.

However, challenges loom. The incoming U.S. administration’s threat of a 25% tariff on Canadian goods poses significant risks. Approximately 1.8 million Canadian jobs depend on U.S. demand, with industries such as oil and gas, pipeline transportation, and manufacturing among the most vulnerable.

Year-End Summary

Canada’s labor market closed 2024 with 413,000 more people employed than a year earlier, and the employment rate rose to 60.8%, the first increase since January 2023. Slower population growth in the latter half of the year contributed to this rise.

Despite the uncertainties ahead, December’s job growth highlights the resilience of Canada’s labor market as it continues to recover from economic challenges.