Canada’s job market limped to a lackluster close in December while the U.S. labour market continued to gallop ahead.
The diverging labour market reports sent the Canadian dollar to a five-and-half year low on Friday amid speculation Canada’s economy is falling behind that of its biggest trading partner.
Canada’s unemployment rate held steady at 6.6 per cent in December, despite an unexpected loss of 4,300 net new jobs, Statistics Canada said Friday.
It was the second month in a row of job losses, following two months of large gains.
For the year, the Canadian economy has created 186,000 net new jobs, an increase of just 1 per cent, the federal agency said.
It was the labour market’s worst performance outside a recession since 1996 on an average annual basis, TD Bank economist Jonathan Bendiner said.
Most of the gains came in the second half of the year, creating momentum that’s expected to spill over into 2015, he noted.
Plunging oil prices and provincial government restraint could constrain future hiring, Bendiner cautioned.
As well, Canada’s economic growth in 2015 is expected to be tightly linked to exports, a sector that is less labour intensive than other sectors of the economy, the TD report said.
In the U.S., meanwhile, the economy continued to roar ahead. The labour market created a better than forecast 252,000 net new jobs in December, while the unemployment rate ticked down 0.2 percentage points to 5.6 per cent, according to two separate reports released Friday.
For the year, the U.S. has created 2.95 million net new jobs, its best labour market performance since the tech boom of 1999, BMO senior economist Sal Guatieri wrote in a note to clients.
December’s decline in the jobless rate was partly due to a decline in the labour force participation rate — a measure of the percentage of people looking for work, he noted.
Average weekly hours worked in the U.S. rose in December, but average hourly earnings fell, the BMO economist noted.
The soft wage trend could mean the U.S. Federal Reserve will delay any increase in its trend-setting interest rate to the middle of 2015, Guatieri predicted.
In contrast, Bank of Canada Governor Stephen Poloz has said the slump in crude oil, the nation’s biggest export, will dampen economic growth and curtail inflation this year, fuelling speculation any interest rate increase in Canada could come much later.
The loonie, nicknamed for the image of the aquatic bird on Canada’s $1 coin, fell 0.1 per cent on the reports to 84.42 cents U.S. The currency has lost 8.9 per cent since mid-June as crude oil plummeted amid rising supply and falling demand.
“The jobs report just really highlights that divergence with a stronger U.S. economy and underperformance in Canada,” said Camilla Sutton, chief foreign-exchange strategist at Bank of Nova Scotia.
Full-time employment in Canada rose by 53,500 jobs in December but was more than offset by a decline of 57,700 in part-time work, Statistics Canada said.
By industry, the biggest losers were accommodation and food services, down 33,000, while agriculture, public administration and natural resources all made gains, Statistics Canada said.
Alberta remained a strong spot, gaining 5,700 jobs, and led the country with 2.9 per cent job growth for 2014, for a total of 95,100 net new jobs. But that could change as a steep slide in oil prices triggers a wave of cost cutting in the energy sector.
Ontario lost 3,500 jobs in the final month of the year, but employment for the year was up 1.2 per cent with a gain of 79,900 jobs in 2014.
In Toronto, the unemployment rate for December held steady at 7.8 per cent.
For the year, some of the biggest employment gains came in cities just outside the Greater Toronto Area — including Hamilton, Barrie, Guelph and Oshawa.
Youth unemployment edged up 0.3 percentage points in December to 13.3 per cent, but for the year was down 0.7 percentage points, with a gain of 62,500 net new jobs over the course of 2014.