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OTTAWA — The unemployment rate fell to its lowest level in more than 40 years as Canada closed out a calendar year that saw it produce jobs at a pace not seen since 2002.
Statistics Canada reported Friday that the unemployment rate dropped to 5.7 per cent in December, down from 5.9 per cent the month before, to reach its lowest mark since comparable data became available in 1976.
The unemployment reading fell last month as the economy generated 78,600 net new positions, including 23,700 full-time jobs.
Looking at 2017 as a whole, employment rose 2.3 per cent for its fastest growth rate in 15 years. Over the past 12 months, the economy added 422,500 jobs with the gains driven by 394,200 new full-time positions, the agency’s labour force survey said.
In December 2016, the unemployment rate was 6.9 per cent, the report said. The last time the jobless rate was 5.8 per cent was October 2007.
Several analysts said Friday’s solid labour report might be enough to encourage Bank of Canada governor Stephen Poloz to introduce another interest-rate hike later this month. Poloz has raised the benchmark rate twice since the summer, citing the stronger economy.
“It looks like as much as Canadian economic growth has softened a little bit over the second half of the year, the labour market is just still rolling right on,” said BMO senior economist Robert Kavcic.
“We know the Bank of Canada is back into a rate-hike mode and they are pretty well data dependent right now in terms of when and how quickly that pace of rate hikes is going to play out.
“This is pretty obviously one vote in favour of the bank certainly moving in March, if not bringing that forward to raising rates in January.”
Still, Kavcic remains a little bit hesitant to predict that a rate increase at the Jan. 17 policy meeting is a sure thing.
He expects Poloz to carefully assess the findings in the Bank of Canada’s business outlook survey, which will be released Monday. The central bank also might wait a little longer months into 2018 to analyze the economic impacts of new changes to mortgage stress tests, Kavcic added.
Other experts, however, think the December report will be enough to convince the central bank to raise the rate sooner rather than later.
“The Canadian data flow rung in the new year with panache, with the jobs report for December stacking on another spectacular gain,” CIBC economist Nick Exarhos wrote Friday in a research note to clients.
“We think that today’s report is enough to push governor Poloz into a rate hike later this month.”
By region, Quebec and Alberta saw the biggest increases last month with each province adding more than 26,000 new jobs. Quebec’s unemployment rate fell 0.5 percentage points to 4.9 per cent, while Alberta’s dropped 0.4 percentage points to 6.9 per cent.
The December reading marked the 13th-straight month of job gains, however, about half of those positive numbers were within the survey’s margin of error.
Looking back at 2017, factories saw employment increase 3.5 per cent, while the services sector experienced a boost of two per cent.
The survey also found that over the last year the number of employed people aged 55 and over rose 5.3 per cent. This exceeded the 2.9 per cent rate of population growth for the age group.
Among core-aged workers, those between the ages of 25 and 54, employment increased 1.6 per cent last year.
In a separate report Friday, Statistics Canada says the country’s merchandise trade deficit widened to $2.5 billion in November, compared to a $1.6-billion deficit the month before, as imports outgrew exports.
