| Consensus | Consensus Range | Actual | Previous | |
| Employment - M/M | -5,000 | -35,000 to 40,000 | 8,200 | 53,600 |
| Unemployment Rate | 6.7% | 6.6% to 6.8% | 6.8% | 6.5% |
Highlights
For its last insight from the labour force survey before its January 28 policy announcement, the Bank of Canada is looking at a stronger-than-expected 8,200 employment gain in December, while the unemployment rate rose to 6.8 percent from 6.5 percent. Forecasters in an Econoday survey had expected the Canadian economy to shed 5,000 jobs, for an unemployment rate of 6.7 percent.
The participation rate increased to 65.4 percent from 65.1 percent the previous month.
Average hourly wage growth slowed down to 3.4 percent year-over-year (unadjusted) from 3.6 percent in November.
Employment in December was led by full-time positions, up 50,200, while part-time fell 42,000 after having led gains in October and November. Over 12 months, part-time employment rose fater than full-time employment: 2,6 percent versus 0.7 percent.
Most of the job gains came from self-employment, up 7,300 in December, while the number of employees was up just 800, led by a 1,300 increase in the public sector, while the private sector shed 500 jobs, pointing to the reluctance of businesses to hire.
The overall picture indicates the recent strength in job gains was temporary, although there aren't massive layoffs, reflective of a state of high uncertainty.
Looking at the sector breakdown, jobs gains were concentrated in the goods-producing industries, which added 8,000 positions, while services employment edged up just 100 as a result of diverging trends.
The BoC pays close attention to the share of job cuts in sectors most impacted by U.S. tariffs - mainly in goods-producing industries - in assessing to which extent the damage from trade tensions is spreading to the rest of the economy. It is particularly important in light of the upcoming review, in July, of the Canada-United States-Mexico Agreement (CUSMA), which the BoC characterizes as a significant risk. Statistics Canada estimates that 1.9 million people, representing 9.3% of total employment, worked in industries dependent on U.S. demand for Canadian exports in 2024, notably natural resources, manufacturing, although motion picture and sound recording industries are also exposed.
Given the volatility in data in recent months, the BoC has warned it would be cautious in interpreting incoming data, only prepared to move if they materially change its outlook. On that front, it downplayed the surprisingly strong performance of the labor market in the three months through November, pointing to a mixed picture painted by a broader set of indicators and to the fact that part-time has been leading hiring.
The December report supports the central bank's cautious interpretation given the rising unemployment rate and the stalled employment in the private sector. This does little to change the BoC's overall outlook despite the employment gain in goods-producing industries, led by an 11,200 growth in construction and a 4,300 increase in manufacturing jobs. Elsewhere in goods-producing industries, natural resources declined 3,500 and utilities fell 5,300.
In services, gains of 20,800 in health care and social assistance, 15,300 in other services, and 10,500 in educational services offset declines of 18,100 in professional, scientific and technical services, 12,300 in accommodation and food, and 10,200 in finance, insurance, real estate, rental and leasing.
Overall in 2025, the Canadian economy added 226,300 jobs, including 128,400 in the fourth quarter. July and August recorded the largest declines of 40,800 and 65,500, respectively.
Market Consensus Before Announcement
Decline of 5K jobs is the call for December with jobless rate up to 6.7 percent from 6.5 percent in November.
Definition
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.
Description
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.