Canadian labour market expected to end 2024 on a down note

RBC Economics has projected a 6.9% Canadian unemployment rate in December, a 10-basis-point uptick from the previous month. The official numbers are due Jan. 10.

“We expect Canada added 10,000 jobs in December despite a rising unemployment rate,” wrote Nathan Janzen and Carrie Freestone in a note to investors. “This has broadly been a story of the pace of job creation (329,000 over the last year) not keeping up with labour market growth (605,000 participants).”

Canada’s seasonally adjusted unemployment rate was 5.8% this time last year.

Janzen and Freestone wrote that the Bank of Canada’s rate cuts will “help stabilize the labour market early in 2025, and slower population growth will limit labour force increases.” Meantime however, we should expect the jobless rate to rise further and wage growth to wane.

The job market is less worrisome south of the border. RBC Economics has forecast a 4.2% U.S. unemployment rate in December, and an increase in employment by 195,000 jobs.

“Job openings have continued to decline, and the share of unemployment coming from layoffs has continued to gradually increase,” wrote Janzen and Freestone. “But, we continue to expect labour markets to remain resilient in 2025, in big part thanks to the positive impacts of an unusually large government budget deficit for this point in the economic cycle.”

Kevin Press

Kevin Press is editorial director for Advisor.ca. He has been writing about money since 1997. Reach him at kevin@newcom.ca.