Employment was virtually unchanged in December as the Canadian economy added 100 jobs, far less than the 10,000 consensus expectation in an Econoday survey. The unemployment rate was unchanged at 5.8 percent, below the 5.9 percent consensus, with the participation rate edging down to 65.4 percent from 65.6 percent the previous month, the lowest in a year.

Full-time employment fell 23,500 in December while part-time increased 23,600.

The employment rate, which has been trending down in 2023, came down to 61.6 percent in December, the lowest level since January 2022. Total hours worked rose 0.4 percent on the month and 1.7 year-over-year.

With today's data bringing evidence of a weakening growth momentum, Econoday's Relative Performance Index, at minus 5, is in a zone consistent with stable monetary policy.

However, the employment slowdown failed to translate into softer wage inflation. To the contrary, unadjusted average hourly wages rose 5.4 percent year-over-year, compared with 4.8 percent in November, a setback for the Bank of Canada.

In 2023, the Canadian economy added 430,300 jobs, up from 409,100 in 2022. However, the slowdown was noticeable in the second half of the year, with 139,800 jobs added, down from 290,500 in the first half of 2023. Part-time employment rose 57,300 in the second half and full-time 82,500.

In December, employment was up 10,900 in the private sector and 6,800 in the public sector, while self-employment was down 17,600.

Goods-producing industries shed 42,900 positions, with weakness across manufacturing, construction and agriculture, which together lost nearly 50,000 jobs. Employment was slightly up in natural resources and utilities.

By contrast, services added 43,100 jobs over the month, led by a 45,700 surge in professional, scientific and technical services, a 15,500 increase in health care and social assistance, and a 12,000 advance in other services excluding administration. Meanwhile, wholesale and retail trade employment fell 20,600 and business, building and other support services were down 13,600.

Employment in December is expected to rise 10,000 versus November's 24,900 rise which was better than expected and followed October's 17,500 gain. December's unemployment rate is expected to rise 1 tenth to 5.9 percent from 5.8 percent in November.

The Labour Force Survey is a key economic indicator giving an overall picture of employment and unemployment. Employment counts the number of paid employees working part-time or full-time in the nation's business and government establishments. The unemployment rate measures the number of unemployed as a percentage of the labor force.

As in the U.S., this report is used as an indicator of the health of the domestic economy. Employment trends and break-downs by industry groups highlight the strength in job creation and the implications for future sectoral activity. The unemployment rate is used as an indicator of tightness in labor markets and can foreshadow a future increase in wages. Labor force data provide investors with the earliest signs of industry performance. While other data are produced with a month or two delay, these data are available only a week to 10 days after the end of the latest month. Reactions can be dramatic - especially when the result is unanticipated.

The information in the report is invaluable for investors. By looking at employment trends in the various sectors, investors can take more strategic control of their portfolio. If employment in certain industries is growing, there could be investment opportunities in the firms within that industry.

The bond market will rally (fall) when the employment situation shows weakness (strength). The equity market often rallies with the bond market on weak data because low interest rates are good for stocks. But sometimes the two markets move in opposite directions. After all, a healthy labor market should be favorable for the stock market because it supports economic growth and corporate profits. At the same time, bond traders are more concerned about the potential for inflationary pressures.

The unemployment rate rises during cyclical downturns and falls during periods of rapid economic growth. A rising unemployment rate is associated with a weak or contracting economy and declining interest rates. Conversely, a decreasing unemployment rate is associated with an expanding economy and potentially rising interest rates. The fear is that wages will accelerate if the unemployment rate becomes too low and workers are hard to find.