Reuters, January 6, 2018 – According to official data Canada posts released on Friday. The Canadian economy added a significant number of jobs in December. And the unemployment rate unexpectedly dropped. Which increased the possibility that the Bank of Canada will hike rates again this month.
According to figures from Statistics Canada posts, the economy added a net 104,000 jobs in December, considerably above economists’ predictions. And the unemployment rate dropped from 5.1% in November to 5%.
Reuters questioned analysts who predicted a net gain of 8,000 jobs and an increase in the unemployment rate to 5.2%.
According to Statscan, full-time employment, particularly among young people aged 15 to 24, was a major contributor to the increase in employment, which was dispersed across industries.
After increasing by 5.4% in November, the average hourly wage for permanent employees increased by 5.2% in December.
The Canadian dollar recovered some of its earlier losses after the jobs report, and it was trading 0.5% higher against the dollar at 1.35, or 74.07 U.S. cents.
The Bank of Canada has stated that it will be more data-dependent when deciding the policy rate after raising rates at a record pace of 400 bps in nine months to 4.25% last year.
According to Andrew Grantham, senior economist at CIBC Capital Markets, the positive jobs report increases the likelihood that the central bank will lift interest rates by another 25 basis points in January.
However, the BoC’s own business and consumer surveys, which will be revealed in two weeks, will also be crucial in coming to a final decision.
Since the release of the data, the probability of a 25-bp rate increase in January has increased from about 60% to 75%.
“According to prevailing thinking, the Bank was virtually through and that the only rate increase left would likely be one more quarter-point increase in January. And I believe that broad assumption should at least be questioned “Doug Porter, head of economic research at BMO Capital Markets, remarked
Construction was the main driver of the net 22,200 increase in employment in the manufacturing sector. Transportation, warehousing, information, culture, and recreation all had job growth in the services sector of a net 81,700.
According to Statscan, private sector employment increased by 112,000 in December, the most since February, while the number of people working in the public sector and by independent contractors barely changed.
