Canada job creation pauses after hiring surge, unemployment rate rises

Canada created just 8,200 net new jobs in December after three months of outsize gains and the unemployment rate rose to 6.8% from 6.5% as more people searched for work, Statistics Canada said on Friday.

Analysts polled by Reuters had expected a net loss of 5,000 positions and the jobless rate to edge up to 6.6%.

The Canadian dollar dipped to C$1.3880 to the U.S. dollar, or 72.05 U.S. cents, from C$1.3873, or 72.08 cents.

The economy had added a total of 181,000 new jobs from September through November, in contrast to almost no change in the first eight months when U.S. tariffs and trade uncertainty choked hiring.

There were 1.55 million people unemployed in December, an increase of 72,900, or 4.9%, from November.

“With more people once again looking for work, today’s unemployment rate suggests that plenty of slack remains in the labor market,” said Andrew Grantham, a senior economist at CIBC Capital Markets.

Full-time employment rose by 50,200 in December while part-time employment fell by 42,000.

Employment in health care and social assistance in December increased by 20,800 while the professional, scientific and technical services sector posted a drop of 18,100 positions, the first decrease since August.

People aged from 15 to 24 have been hard hit by the economic uncertainty. After posting successive gains in October and November, the first advances since the start of the year, youth employment dipped by 1.0%.

The average hourly wage of permanent employees – a gauge closely tracked by the Bank of Canada to ascertain inflationary trends – rose by 3.7%, down from 4.0% in November.

The Bank held its key policy rate steady at 2.25% on December 10 and said this was about the right level to keep inflation close to the 2% target. Money markets expect rates to stay on hold for the rest of the year.

“While hiring was soft and the unemployment rate rose, the survey wasn’t weak enough to alter expectations for the Bank of Canada,” Desjardins macro strategy head Royce Mendes said in a note.