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Jobs numbers for December offered a \u201cmixed\u201d picture that could convince the Bank of Canada to be patient when it comes to interest rate cuts, some economists say.<\/p>\n
\u201cOverall, this is a classic mixed bag report with some stronger than expected news and some weaker,\u201d said Andrew Grantham, senior economist at CIBC Capital Markets, in note to investors.<\/p>\n<\/section>\n\nArticle content<\/p>\n
Employment was virtually unchanged last month and the jobless rate held steady at 5.8 per cent, Statistics Canada said Jan. 5.\u00a0 Economists had expected a gain of 15,000 jobs and predicted the unemployment rate would rise to 5.9 per cent.<\/p>\n<\/section>\n
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Article content<\/p>\n
Despite an ongoing increase in the working-age population, the participation rate fell 0.2 percentage points to 65.4 per cent leaving the jobless rate unchanged.<\/p>\n
Employed Canadians clocked in more time with total hours worked coming in stronger than expected, up 0.4 per cent in December and 1.7 per cent year-over-year. Average hourly wages grew 5.4 per cent from the same time last year compared with an increase of 4.8 per cent year over year in November.<\/p>\n
The Bank of Canada won\u2019t be happy about the wage growth, said Stephen Brown, deputy chief North America economist at Capital Economics.<\/p>\n
\u201cThat is far too high to be consistent with the Bank of Canada\u2019s 2 per cent inflation target,\u201d he said in a note.<\/p>\n
Here\u2019s what economists are saying about the jobs numbers and what they mean for the Bank of Canada and interest rates.<\/p>\n
Nathan Janzen, RBC Economics<\/h2>\n
\u201cThe bottom wasn\u2019t falling out from under Canadian labour markets in December. But employment growth has slowed, the unemployment rate is still up significantly from the spring, and (despite still surging population counts) hours worked outright declined in Q4 of last year for the first time since Q2 2020. The Bank of Canada will still be cautious about pivoting to rate cuts too quickly \u2013 and wage growth is still running above the pace historically consistent with their 2% inflation target. But our own expectation is that the economic backdrop is soft enough for inflation to continue to move lower and that the BoC will start to push the overnight rate lower around mid-year this year.\u201d<\/p>\n<\/section>\n