Canada’s unemployment rate unexpectedly fell again in January, as the economy posted solid job gains.
The latest employment data reveals that Canada’s joblessness was starting to ease from an eight-year peak, barring the pandemic years. The January unemployment rate was 6.6%, a notch below the 6.7% seen in the prior month, and the economy added a net 76,000 jobs, down from a revised 91,000 jobs added in December.
This reflects a robust gain and further signs of an improving economy. This was the second month in a row that the unemployment rate, or the number of jobless people as a percentage of the total labour force, declined. However, the total number of unemployed people stayed at a high of 1.5 million and joblessness still continues to be elevated.
Canada’s national statistics agency, Statistics Canada says, “This indicates that many unemployed people are facing continued difficulties finding employment, despite recent employment growth.” Canada’s economy has been teetering for most of last year, as large interest rate cuts failed to boost consumer spending and business investment.
However, the Canada’s Central Bank reported last month that while the job market remained soft, there were signs of improvement, as a total of 200 basis points of quick rate cuts was helping business activity to pick up and boosting consumer spending. A looming threat of tariffs from the United States and a sharp drop in immigration number are likely to impact economic activity.
Businesses are already reporting soft hiring intentions for the year, a Central Bank survey showed last month. Economists have said that if tariffs are imposed, the Bank of Canada will have to continue to cut rates.
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