Stronger and stronger

The US non-farm payrolls data for December that were released this morning show some signs of a slowdown in employment growth.  In contrast, the Canadian jobs market continued to barrel ahead.  With the market consensus looking for a minimal increase in employment, the actual result was a 78,000 increase in the month.  This brought the unemployment rate down to 5.7 percent, the lowest level since the comparable data series began in January 1976.*

The majority of the new jobs in December (over 50,000) were part time positions, but the data for the full year tell a different story.  The economy added 423,000 jobs in 2017, almost twice as many as in 2016.  Of those jobs, 394,000 were full-time in nature.  Seven of the ten Provinces added jobs and lowered their unemployment rate during the year, with the only exceptions being three of the smaller Provinces: Saskatchewan, Newfoundland and Labrador, and New Brunswick.

The 423,000 increase in employment represents a 2.3 percent annual increase, and the sectoral breakdown reveals some impressive increases.  Employment in the goods-producing sectors was broadly higher, with a 3.5 percent increase led by a rise of more than 5 percent in manufacturing jobs.  Natural resources employment rose strongly after two years of sharp decline.  The services sector posted a 2 percent increase in employment, led by transportation and finance.

I've gone into more detail than usual on these numbers to underline the fact that the Canadian economy is pretty much firing on all cylinders here.  Things may turn sour if the NAFTA talks fail, but there is very little reason for the Bank of Canada to hold back on a rate increase when its Governing Council meets on January 17.  An updated Monetary Policy Report will be published on the same day.  Bank Governor Stephen Poloz has been emphasizing that rate decisions remain data dependent.  In that context, today's employment number, combined with the fact that CPI has moved above the Bank's 2 percent target, must surely argue for a 25 basis point hike. 


* I was just a year into my Canadian economics/banking career back then, but I can't claim to remember this!