Laurentian Bank Securities economist Dominique Lapointe argues that Statistics Canada’s report provides an overview of the economy before the arrival of the Omicron variant.
You have to take it with a grain of salt, but what it says is that before the variant, the employment situation was really solid.
, he said.
The global report shows a job gain that is twice as big as what we expected.
Statistics Canada’s report builds on the results of a survey conducted the week of December 5-11, before public health restrictions were put in place to slow the latest rise in COVID-19 cases .
The highly transmissible Omicron variant has fueled a massive spike in COVID-19 cases, with daily increases in new cases by the tens of thousands in recent days.
In its labor force survey, the federal agency said the unemployment rate fell slightly to 5.9%, following settling at 6.0% in November.
This was the lowest unemployment rate since February 2020, before the pandemic. It was then 5.7%. In addition, the new unemployment rate is now only half a percentage point from its record low of 5.4%, reached in May 2019.
Statistics Canada also noted that the number of jobs increased by 886,000 from December 2020, and 240,500 from February 2020, before the pandemic.
Full employment for a rate hike?
This new employment data precedes the Bank of Canada’s next decision on its key interest rate, as well as the publication of its report on monetary policy, two events scheduled for January 26. The central bank is expected to start raising its interest rate target later this year.
Last month, when renewing its monetary policy framework with the federal government, the Bank of Canada agreed to keep its inflation target range between 1.0% and 3.0%, but also to keep an eye on it. formal in the labor market when making decisions regarding its policy rate.
Mr. Lapointe said the December employment report suggested that the economy was close to full employment.
This is something the Bank of Canada wanted to have before they started raising interest rates, for sure.
, he said.
The economist believes the central bank will wait until April before starting to raise interest rates, but added that there is a possibility it might act sooner.
Due to the uncertainty of the variant, we believe it is a bit premature to start increasing rates as early as in two weeks.
, he observed, adding that Statistics Canada would release its next inflation report on January 19, before the central bank’s decision on interest rates.
Lapointe said he expects the inflation report to show that the annual rate of price increases has reached 5%, or maybe just a little more.
TD Bank economist Sri Thanabalasingam noted that the employment increase for December was well above the general forecast of a 25,000 job gain for the month.
« With the number of cases [de COVID-19] Daily dailies growing at an incredible rate and provinces tightening the screws on mobility, January’s labor market numbers are likely to be weaker. »
I hope Omicron’s impact will be short-lived, allowing the labor market to recover quickly in the coming months.
The overall increase in jobs in December was attributable to a gain of 123,000 full-time jobs, while part-time employment fell by 68,000.
The job gain in December was fueled by the construction and educational services sectors.
The construction industry added 27,000 jobs in December, registering its first increase since August, but the sector still remains at 41,000 jobs below its pre-pandemic level of February 2020.
Education Services welcomed 17,000 new employees in December.
The average hourly wage increased 2.7% from the previous year.
Main advances in Ontario and Saskatchewan
Employment increased in Ontario and Saskatchewan, while it declined in Newfoundland and Labrador. The other provinces recorded little variation.
In Quebec, the unemployment rate edged up 0.1 percentage point to 4.6% in December, Statistics Canada said. Over one year, employment has grown by 3.8% in Quebec.
In New Brunswick, the unemployment rate fell 0.6 percentage points in December from the previous month to 7.9% – the same rate as in Nova Scotia, where it fell by 0 , 2 point. In Prince Edward Island, the unemployment rate fell 0.2 points from November to 7.8%.
Statistics Canada is due to release its January 4 labor market report on February 4.
