Canada job increase. Image credit: Unsplash/The Jopwell Collection
Ottawa/CMEDIA: Canada experienced a larger-than-expected unemployment fall by 5.7 percent last month, Statistics Canada reports said.
Statistics Canada’s labour force survey released Friday said the economy added 37,000 jobs in Jan after several months of relatively no change in employment.
Consequently, Canada’s unemployment rate fell to 5.7 percent last month, the first decline since Dec 2022.
Between Dec and Jan, Canada’s population of people aged 15 and older reportedly grew 0.4 per cent, far surpassing the 0.2 per cent growth in employment.
Canada’s high interest rates weighed on the labour market’s consumer spending and business investment in 2023 pushing the unemployment rate up from 5.1 percent in Apr to 5.8 percent in Dec.
The unemployment rate, however, doesn’t give the full picture when it comes to the state of the labour market, Brendon Bernard, a senior economist with hiring website Indeed reported saying and added because it only measures the proportion of unemployed people among those who are actively looking for work.
Employment rate measures the proportion of the working-age population that’s employed. Statistics Canada’s report emphasized, has been declining for four consecutive months, including in January.
“I think that’s probably a better barometer of the direction of the labour market,” Bernard said.
In spite of the relatively decent state of the labour market, economists believe that the central bank can take its time when it comes to cutting interest rates.
The Canadian economy also appeared to end 2023 on a stronger note than expected.
Earlier this week Statistics Canada reported the growth of the economy by 0.2 per cent in November, marking the first expansion in six months.
It was suggested by a preliminary estimate that there was an increase of 1.2 percent in real gross domestic product on an annualized basis in the fourth quarter, following a decline of a similar magnitude in the third quarter.,
Last month, following the Bank of Canada’s option to hold its key interest rate at five percent, it also signalled that it’s nearing closer to rate cut considerations.
However, governor Tiff Macklem, concerned about the inflation and price growth, warned the central bank will be ready to raise rates.
Strong population growth, driven by permanent and temporary immigration has been supporting Canada’s labour market.
With the working-age population expanding by one million people this year, the economy added 345,000 jobs.
Due to Bank of Canada maintaining its key interest rate at five per cent, economists forecat that unemployment will rise throughout this year.