Canadian employment increased for a third consecutive month, but the small gain leaves the Bank of Canada's options open as it heads into its last policy decision of the year.
In November, the economy added just 10,100 jobs, while the unemployment rate fell to 5.1% as the participation rate fell, according to Statistics Canada in Ottawa. The median estimate in the Bloomberg survey shows that employment gains were in line with the median estimate of 5.3%, with economists expecting a jobless rate of 5.3%.
Friday s tepid reading, which follows an increase of 108,000 jobs in October, suggests that the nation's recent rebound from a midyear labor-market slump may have been temporary.
With the jobless rate falling back to near record lows and core-age employment showing signs of momentum, the data will raise questions about whether the weaker employment gains are the result of demand slowing in Canada's economy or a rapidly dwindling supply of labor.
Friday's figures are the last input into the central bank's Dec. 7 rate decision. Overnight swap markets are fully pricing in a 25 basis-point hike next week, with traders putting a one-third chance on a 50 basis-point move.
The Bank of Canada will not change its rate decision next week, but it is quite clear that the labor market remains in solid shape and in good shape overall, according to Doug Porter, chief economist at the Bank of Montreal.
The loonie fell sharply after the report but decreased some of its losses, trading 0.4% lower at C $1.384 per US dollar at 10: 57 a.m. in Toronto. Bonds sold off, with the yield on the two-year debt of benchmark Canada jumping as many as 17 basis points from its pre-release level before falling back to 3.852%.
Pressure on Governor Tiff Macklem is a result of rising wages as the central bank tries to tamp down inflation. They showed no signs of cooling in November, with average hourly pay up 5.6% from a year ago, the same pace as in October. It is the sixth month in a row of increases over 5%.
The number of workers in construction fell by 25,000, reversing gains made in the previous month, while employment in wholesale and retail trade fell for the fourth time in six months.
Canada's largest provinces led jobs gains, with Ontario and Quebec adding over 50,000 positions combined. Employment declined in all provinces except Nova Scotia.
The figures from the Statistics Canada showed that third-quarter gross domestic product nearly doubled expectations with a 2.9% annualized gain. A flash estimate for October suggested that momentum had stalled. Household consumption is slowing and housing investment has fallen due to rising borrowing costs.
Most economists think the country will enter a technical recession early next year.
After lowering the benchmark overnight lending rate to 3.75%, Macklem and his officials have already started slowing down the pace of hikes, despite the fact that the benchmark overnight lending rate had fallen to 3.75% from the emergency pandemic low of 0.25% that held until March.
In their prime working years, the biggest increase in employment was seen in women: 81.6% of those aged 25 to 54 have jobs, a record. The employment rate for younger women and older men declined.
The month before, the total hours worked were little changed, and were up 1.8% from the previous year.