Canada’s job growth zooms past expectations

Like a beefy bro at the gym, Canada’s seeing some serious gains. Job gains from last month, that is. 

What happened: Canadian unemployment dropped to 5% to close out 2022 as employers added a whopping 104,000 new positions last month. Analysts were about as accurate as a blindfolded man playing darts, with most predicting projecting a meagre 8,000 job increase. 

  • As jobs surged, wages also continued to rise, with national annual average hourly wage growth exceeding 5% for the seventh straight month—an unusually robust rate.

Why it matters: Strong employment numbers might signal a healthy economy, but they’re also a sign of sticky inflation. In a tighter labour market, wages increase, stimulating consumer spending and ratcheting inflation. Simultaneously, businesses need more money to afford employee wages and raise prices even further to defend their margins. 

Bottom line: While some experts previously believed the Bank of Canada (BoC) might put a pause on interest rate hikes, December’s job numbers have all but guaranteed another bump (currently pegged to come in at 0.25%) to combat inflation. 

Zoom out: The US also reported higher-than-expected job growth yesterday. But alongside slowing wage growth and a decline in actual hours worked, it means the US Federal Reserve is in a better position to slow its rate hike roll than its Canadian counterpart.