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Canada’s unemployment rate holds steady, but wages remain weak

Jan 7 2019, 04:54 AM (CST) |

The latest monthly unemployment report released on Friday showed that Canada's unemployment rate was steady at a 43-year low at 5.6% in December. Canada's unemployment rate remained stable for the second straight month and was the lowest unemployment rate since 1976.

The Canadian economy was seen adding 9,300 jobs during the period, official data from Statistics Canada showed last week.

The number of jobs added was slightly higher than expected. Economists forecast that the economy added 5,500 jobs during the period and expected the unemployment rate to rise to 5.7%.

Despite the modestly better than expected data, the labor market showed that wage growth remained weak. For the month of December, wages grew just 1.49% which was well below the inflation rate.

On a year over year basis, Canada's average hourly wage growth for those employed in a full-time job was at 1.46% in November. Wage growth in Canada was seen peaking at highs of 3.9% in May last year.

The unemployment rate was seen to be less than exciting.

This was because most of the job gains in December came from part-time jobs. Full-time employment fell 19,000 during the month.

The net employment among those who were salaried fell 37,000 during the month. Thus, most of the gains came from self-employed people. The numbers for December follow the November performance which saw the economy posting a net gain job of 94,100. This was the most significant increase since March 2012.

Statistics Canada said that the December jobs report was the lowest to have any statistical significance. However, on a regional basis, data showed that employment in some parts of Canada was hit the hardest due to lower oil prices.

The region of Alberta in Canada saw a net decrease in jobs by 16,900 which was about 0.7% compared to November. The increase in part-time employment was overweight by the loss of full-time jobs that were created.

For the year of 2018, employment in the Alberta region was seen rising 0.9% or about 21,600 jobs.

The unemployment rate in the region fell from 7% at the beginning of 2018 to just 6.4% by the end of the year.

Further data from Statistics Canada showed that the economy gained 163,000 net jobs. This was about 0.9% increase, but it was a slower pace of growth compared to the 2.3% increase in 2017 and also lower than the 2016 rate of 1.6%.

Last week's report from Canada was the first economic release for this year. The data comes ahead of this week's Bank of Canada monetary policy meeting. The central bank has been focusing on wage growth ahead of its interest rate decision as it decides how households which are indebted can afford higher borrowing costs.

Heading into the central bank’s meeting, the BoC is expected to hike interest rates by a quarter basis point. This would mark the fifth interest rate hike from the BoC and the first this year. However, the weaker pace of job growth is expected to make the central bank officials think twice.

In another separate report which measures inflation at the factory gate showed a decline. Canada's producer price index fell in November with the declines attributed to lower oil prices. The raw materials price index was also seen falling.

The producer price index for Canada was seen falling 0.8% in November, data from Statistics Canada showed last week. The declines came amid October's increase of 0.2% in the headline producer price index.

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