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December Delivers: Risks Loom, but Jobs Stay Strong

Canadian Economics

By: Liam Daly

  • In December, employment in Canada increased by 91,000. The employment rate rose by 0.2 per cent, the first increase since January 2023. Job growth was broad-based with gains recorded in 13 of the 17 industrial sectors. The labour force participation rate was unchanged at 65.1 per cent and the unemployment rate inched down to 6.7 per cent.
  • Among the goods-producing sectors, employment growth was led by gains in construction, utilities and manufacturing. Meanwhile, in the service economy the largest rises were recorded in healthcare and social services, educational services, transportation and warehousing as well as finance, insurance, real estate, rental and leasing.
  • Across Canada, employment rose in 5 of the ten provinces. Employment increased in Alberta (+35,000; +1.4%), Ontario (+23,000; +0.3%), British Columbia (+14,000; +0.5%), Nova Scotia (+7,400; +1.4%), and Saskatchewan (+4,000; +0.7%). In Manitoba, employment declined (-7,200; -1.0%). Employment was little changed in the remaining provinces.
  • On an annual basis, the pace of average hourly wage growth fell to 3.8 per cent. This was the slowest pace of wage growth since May 2022 and a further signal that wage growth is cooling in response to slacker labour market conditions.

Key Insights

Today’s Labour Force Survey (LFS) results for December complete a year in which Canada’s labour slackened amid weakening labour demand and strong labour force gains underpinned by surging international migration. Over 2024, the unemployment rate rose from 5.7 per cent in January to 6.7 per cent in December. A reversal of these trends is expected in 2025, with lower immigration and better job prospects lowering the unemployment rate through the year.

While there are several downside risks heading into 2025, today’s release offers some reassuring signs regarding the fundamental health of the labour market. Employment has now risen in three of the last four months and despite headwinds, total job growth for 2024 totaled 413,000, which is comparable to 2023 and the 2017-2019 pre-pandemic average. One area of concern in the job market condition is the deterioration in conditions for young Canadians. Unlike their core-aged and senior counterparts, youth (aged 15 to 24) have experienced as sharper fall in their employment rate, which now lies almost 5 per cent below the pre-pandemic average.

Recent threats by the incoming U.S. President of economic force and coercion are a sure sign that a storm is brewing for Canada’s key trading relationship. The impact of trade tariffs would be wide reaching, impacting jobs, prices and investment both sides of the border. In the labour market, the proportion of jobs linked to exports varies significantly by industry. The share of jobs linked to exports (both in terms of direct jobs and the jobs generated in all other upstream industries) is greatest in manufacturing, mining and other primary sectors. Across the service economy, the largest share of jobs linked to exports are those in wholesale trade, transportation and warehousing as well as professional, scientific and technical services. As Ottawa mulls how best to respond to the President’s bellicose remarks, Canada must quickly adapt to a new relationship, one in which the U.S. administration willing to exert economic force to extract political concessions.

For more discussion on the economic implications of trade tariffs, see our recent analysis, available here.

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