Last month, employment figures in Canada remained flat despite the country’s continued strong population growth. This resulted in the unemployment rate maintaining its steady state - a clear sign that the labor market is becoming more relaxed due to the economy weakening. The central bank may take comfort from this data; however, it could be overshadowed by the largest wage increase in almost three years.

Statistics Canada reported last Friday that the number of employed working-aged people in Canada rose by a net 100 in December, resulting in no significant change from the previous month. The unemployment rate stayed at 5.8%. The market had predicted a modest increase of 15,000 jobs and a slight increase in unemployment to 5.9%. Yet, employment rates across the country have been trending downwards throughout the year.

Nearly all employment gains for December came from the services sector, with the addition of 43,100 positions. This was despite a third consecutive month of declines in wholesale and retail trade. This rise was almost negated by a decline of 42,900 jobs in the goods-producing sector, primarily in the areas of agriculture, construction and manufacturing.

When observing the types of employment opportunities, there was a balanced split, with a loss of 23,500 full-time roles and the addition of 23,600 part-time positions. Overall, 1.2 million people were unemployed in Canada in December – a 19.3% increase from the previous year.

With virtually no growth in employment and no change in unemployment rates last month, the labor-force participation rate fell by 0.2 points from the previous month to 65.4%. This rate refers to the proportion of the working-age population that were either employed or unemployed. The rate has seen a decline from 65.7% in June, largely due to a drop in youth participation. Economists expect that this slow increase in unemployment will continue into the early months of the new year, leading to less wage growth and potential rate cuts from the central bank.