The Canadian labor market continues to defy expectations, as the economy recorded the biggest one-month job gain in nearly six years while the unemployment rate dropped below the 6% mark to a fresh post-crisis low.
Wage growth also accelerated, with average hourly pay rising at its fastest pace in 19 months.
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The Canadian economy added a net 79,500 jobs in November on a seasonally adjusted basis, Statistics Canada said Friday. The consensus call among traders was for a 10,000-job advance, according to economists at Royal Bank of Canada. The last time the economy added this many jobs in one month was in April 2012.
Meanwhile, the unemployment rate fell to 5.9% in November from 6.3% in the previous month. This marks the lowest rate of joblessness in Canada since February 2008. When using U.S. Labor Department methodology, Canada's jobless rate in November was 5.1%.
The employment report provides a strong sign that economic growth will rebound in the fourth quarter after a slowdown for the July-to-August period. At the same that it released November's labor force survey, Statistics Canada said the country's gross domestic product advanced in the third quarter 1.7% annualized, following a 4.3% gain in the second quarter. Output slowed due to a decline in exports.
"The stellar jobs report should allow for a more two-way discussion about Bank of Canada policy, as, until now, the debate was largely about how much longer the bank would delay the next rate hike," said Sal Guatieri, economist at BMO Capital Markets.
Nearly all of the net new jobs in November were in the private sector. Part-time employment increased 49,900, rebounding after a 53,400 decline in the previous month. On a one-year basis, part-time employment declined slightly.
Meanwhile, full-time employment recorded another healthy gain in November, up 29,600. For the September-to-November period, Canada added roughly 230,000 full-time jobs, or the strongest three-month gain in over a decade. On a one-year basis, full-time employment rose 441,400 or 3%.
Among the highlights of the November jobs report was hiring in the factory sector. Manufacturing employment rose 30,400 in the month, or the strongest one-month gain since February, 2002. The trade component, which incorporates wholesalers and retailers, added 38,800 workers; and construction added 16,200, as hiring in this sector has picked up steam since the summer.
The Bank of Canada raised rates twice earlier this year, but it has now embraced a cautious approach until it gets a firmer grip on how indebted households respond to higher rates. In its most recent decision in October, the central bank said there was still "some excess capacity" in the labor market, with a particular focus given to modest wage gains.
The November employment report indicated average hourly wages rose by a strong 2.8% on a one-year basis, or the third straight month of 2% gains. Total hours worked also rose 1% on a 12-month basis in the month.
At the Bank of Canada's next rate-policy decision on Wednesday, analysts at TD Securities say they expect Governor Stephen Poloz "to stop broadcasting the view that there is still slack in the labour market. There is none left," after reviewing the details of the November report.
Still, the central bank is expected to keep its policy rate unchanged at 1%, although TD Securities said a rate rise in January could now be in play.
Write to Paul Vieira at email@example.com
(END) Dow Jones Newswires
December 01, 2017 10:03 ET (15:03 GMT)