The Canadian economy added twice as many jobs as expected in December and the unemployment rate hit a 22 month low, but analysts think there is a grim January due to restrictions on the fast-spreading Omicron variant of COVID-19.
Canada added 54,700 positions, beating analysts' expectations of a gain of 27,500, while the unemployment rate fell to 5.9% from 6.0% in November, according to Statistics Canada on Friday.
This was the lowest level since February 2020, when the 5.7% reported for February 2020, just before COVID 19 emerged. The latest survey was completed in early December, before what Statscan called the widespread emergence of Omicron.
Several provinces have since clamped down, which could weigh on January's numbers, analysts said.
Derek Holt, head of capital markets economics at Scotiabank said that we're still waiting for the other shoe to drop this is not capturing Omicron sensitivities one bit.
Holt said the restrictions are in Ontario and Quebec, the two most populous Canadian provinces, and that unvaccinated workers are being laid off under vaccine mandates.
Toronto, the country's most populous city, said this week it had fired 461 workers for not complying with a mandatory vaccine policy. More than 3,000 people have requested exemptions, according to the latest data from Canada's federal civil service.
The overall employment trend is strong, according to economists.
Jimmy Jean, chief economist at Desjardins Group, said full-time jobs increased by 122,500, accounting for the entire net gain, because of the fact that it doesn't change the big picture.
The loss of 67,700 part-time jobs was partially offset by this. The economy added 10,600 service-sector jobs and 44,200 jobs in the goods-producing sector. Canadian employment is now 240,500 above pre-pandemic levels.
Com markets us bank-canada says-likely cut-rates-effective-lower bound-more -- often -- last month -- 2021 -- 12 -- 15 said last month that labor market slack had been absorbed to a significant degree, signalling a first interest rate hike could come soon. Money markets expect the central bank to raise rates in March.
Andrew Kelvin, Chief Canada strategist at TD Securities said that it's important that the Bank of Canada's move more quickly can be made because of the pressure on the Bank of Canada.
The Canadian dollar increased by 0.3% to C $1.2694 per greenback, or 78.78 U.S. cents.