The Canadian economy created 55,000 jobs in December before COVID-19 cases began to increase at the end of the month, prompting public health restrictions that have forced many businesses to close or scale back their operations.
Dominique Lapointe, senior economist at Laurentian Bank Securities, said the report provides an overview of the economy before the Omicron variant.
“You have to take it with a grain of salt, but what he’s saying is that before the variant the employment situation was really solid,” he said.
“The overall report shows double the job gains we expected.”
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The report was based on the results of an investigation carried out during the week of December 5-11, before public health restrictions were put in place to slow the latest increase in COVID-19 cases.
The highly transmissible variant of Omicron has fueled a record spike in COVID-19 cases with daily increases in new cases by the tens of thousands in recent days.
In its labor force survey, Statistics Canada reported that the unemployment rate edged down to 5.9% from 6.0% in November.
It was the lowest unemployment rate since February 2020 before the pandemic, when it was 5.7% and half a percentage point from the record of 5.4% set in May 2019.
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Statistics Canada also said the number of jobs increased by 886,000 from December 2020 and 240,500 from February 2020 before the pandemic.
The jobs report preceded the Bank of Canada’s interest rate decision and monetary policy report on January 26. The central bank is expected to start raising its key interest rate target later this year.
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Last month, when renewing its monetary policy framework agreement with the federal government, the Bank of Canada agreed to keep the central bank’s inflation target range of one to three percent, but also to keep a more formal eye on the job market when it makes interest rate decisions.
Lapointe said the December jobs report suggests the economy was close to full employment.
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“This is something the Bank of Canada was looking for before they started raising interest rates for sure,” he said.
Lapointe expects the central bank to wait until April before starting to raise interest rates, but added that there is a chance it will move sooner.
“Due to the uncertainty with the variant, we think it’s a bit premature to start raising rates as soon as two weeks away,” he said, adding that Statistics Canada will release its next report on inflation on January 19 before the central bank’s decision. interest rate decision.
Lapointe said he expects the inflation report to show that the annual pace of price increases will reach five percent or maybe just a little above that mark.
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TD Bank Senior Economist Sri Thanabalasingam said the job increase for December was well above the consensus call for a 25,000 job gain for the month.
“With the number of daily cases increasing at an incredible rate and the provinces tightening the screws on mobility, January’s labor market numbers are likely to be lower,” Thanabalasingam wrote in a report.
“I hope Omicron’s impact will be short-lived, allowing the labor market to recover quickly in the months to come.”
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The overall increase in jobs in December was due to a gain of full-time jobs of 123,000, while part-time employment fell by 68,000 for the month.
The job gain in December was attributable to the construction and educational services sectors.
The construction industry added 27,000 jobs for the month, its first increase since August, but the sector still remains 41,000 below its pre-COVID-February 19, 2020 level.
Educational services gained 17,000 jobs in December.
The average hourly wage increased 2.7% from the previous year.
Statistics Canada is expected to release its January jobs report on February 4.
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