Canada’s Job Growth Slows After Hiring Surge as Unemployment Rate Rises

Canada’s job creation slowed sharply in December following three months of strong hiring gains, while the unemployment rate rose as more people entered the labor market in search of work.

The economy added a net 8,200 jobs in December, while the unemployment rate increased to 6.8% from 6.5% in the previous month. The rise in joblessness reflected a growing number of people actively looking for work.

The Canadian dollar weakened slightly following the data, slipping to 1.3880 per U.S. dollar, or about 72.05 U.S. cents, compared with 1.3873, or 72.08 cents, earlier.

From September through November, the economy had generated a combined 181,000 new jobs, following a largely stagnant period during the first eight months of the year, when hiring was constrained by trade uncertainty and U.S. tariffs.

In December, the number of unemployed Canadians rose to 1.55 million, an increase of 72,900 people, or 4.9%, compared with November.

“With more people once again looking for work, the latest unemployment rate indicates that there is still considerable slack in the labor market,” said Andrew Grantham, senior economist at CIBC Capital Markets.

Full-time employment increased by 50,200 positions in December, while part-time employment declined by 42,000.

By sector, employment in health care and social assistance rose by 20,800 positions. In contrast, the professional, scientific, and technical services sector shed 18,100 jobs, marking its first decline since August.

Young people have been particularly affected by ongoing economic uncertainty. Employment among those aged 15 to 24 fell by 1.0% in December, after recording gains in October and November—the first increases since the beginning of the year.

Average hourly wages for permanent employees, a key indicator monitored by the central bank for inflation trends, rose by 3.7% year-on-year in December, slowing from a 4.0% increase in November.

The central bank kept its benchmark policy interest rate unchanged at 2.25% on December 10, stating that this level was appropriate for keeping inflation close to its 2% target. Market expectations indicate that rates are likely to remain on hold for the remainder of the year.

“Although hiring was subdued and the unemployment rate moved higher, the labor market data were not weak enough to change expectations for monetary policy,” said Royce Mendes, head of macro strategy at Desjardins.