Canada Jobless Rate Falls to Four-Year LowGreg Quinn
Canada’s unemployment rate unexpectedly fell to a four-year low in December as hiring rose for a fifth month, led by full-time jobs at private companies.
The country’s jobless rate fell to 7.1 percent from 7.2 percent and employment rose by 39,800, Statistics Canada said today in Ottawa. None of the 23 economists surveyed by Bloomberg News predicted a drop in the unemployment rate and the gain in jobs was almost double the highest forecast.
The Canadian dollar erased losses after the report, which supports Bank of Canada Governor Mark Carney’s view that economic growth will rebound after slowing to a 0.6 percent annualized pace in the third quarter. The central bank is relying on consumption and business investment to lead an expansion over the next two years, and policy makers reiterated Dec. 4 they may raise interest rates while the U.S. Federal Reserve has eased policy to reduce unemployment.
“We continue to question the sustainability of this hiring trend in the absence of the output gains that would typically be needed to require all that labor,” said Avery Shenfeld, chief economist at Canadian Imperial Bank of Commerce in Toronto. “If that were being backed by corresponding gross domestic product gains, it would hint that rate hikes would come much sooner than the market has priced in.”
Other reports have suggested weakness in the fourth quarter, including economic growth of 0.1 percent in October and a December inflation rate that was the slowest in three years.
While unemployment declined from 7.5 percent over the past year, the rate remains above the 6.1 percent recorded as the start of the last recession in 2008.
“The economy’s lackluster performance is likely to curb any further decline in the unemployment rate in the near term,” said Dawn Desjardins, assistant chief economist at Royal Bank of Canada in Toronto. “For the fourth quarter it’s going to be tough to get a strong growth rate” even with the hiring gain, she said.
Full-time employment rose by 41,200 in December while part-time positions declined by 1,400, Statistics Canada said. Private companies added 59,400 workers and public-sector employment increased by 3,200. Workers designated by Statistics Canada as employees climbed by 62,500 while self-employment decreased by 22,800 in December.
Transportation and warehouse employment rose by 21,500 in December, and construction by 17,800, according to the report.
The Canadian dollar rose 0.2 percent to 98.58 cents per U.S. dollar at 10:13 a.m. in Toronto, after falling as much as 0.5 percent. One Canadian dollar buys $1.0145. Government bond yields rose, with the two-year benchmark rising to 1.21 percent from 1.19 percent.
Professional, scientific technical services employment dropped by 41,500 in December, a loss offset by gains in other service industries such as health, education and retailing.
Bell Aliant Inc. Chief Executive Officer Karen Sheriff said Nov. 15 the telecommunications company has been hiring technicians to meet demand to install new broadband home services.
Average hourly earnings of permanent employees rose 2.5 percent in December from a year earlier, exceeding the prior reading of 2.2 percent.
Today the U.S. Labor Department said that payrolls rose by 155,000 workers last month following a revised 161,000 advance in November, close to a Bloomberg economist survey calling for an increase of 152,000. The unemployment rate held at 7.8 percent, matching the lowest since December 2008.
Statistics Canada also reported today that prices received by manufacturers in November fell less than the costs for their raw materials.
The industrial product price index, which measures the price of finished goods, declined 0.3 percent. The raw-materials price index decreased 1.9 percent. Economists surveyed by Bloomberg forecast the factory index would fall 0.3 percent and the materials index would drop 1 percent.