Canada’s unemployment rate fell to 5% in December as the economy added 104,000 net new jobs during the month.
The strong labour report increases the likelihood that the Bank of Canada will again raise interest rates at its next meeting on January 25.
The 104,000 jobs added in December blew away the expectations of economists, who had forecast an increase of just 5,000 new positions and a jobless rate of 5.2%.
After the red-hot jobs report, overnight swaps traders increased the chance of a 25 basis-point rate increase from the Bank of Canada to 90%, up from 67% previously.
The central bank has raised interest rates by four percentage points since March 2022, bringing its trendsetting overnight rate to its current level of 4.25%.
The biggest employment increase in December was among youth workers. Employment increased in six provinces, including Ontario, Alberta, and British Columbia.
Job gains were seen across economic sectors such as construction, transportation, recreation, scientific and technical services, and accommodation and food services.
The Canadian dollar rose as high as $1.3512 per U.S. dollar from $1.366 on news of the latest jobs numbers.
