Canada's unemployment rate unexpectedly fell, showing signs of recovery in the job market

According to the latest data obtained by Zhitong Finance APP, Canada's unemployment rate unexpectedly fell in January, with the job market continuing to show robust growth. This change indicates that, excluding the special circumstances during the COVID-19 pandemic, Canada's unemployment rate is beginning to decline from the eight-year high recorded in November last year.

According to data released by Statistics Canada on Friday, the unemployment rate in January was 6.6%, down from 6.7% the previous month. During the same period, the Canadian economy added a net 76,000 jobs, which, although lower than the revised 91,000 jobs added in December last year, still demonstrates strong performance. Analysts surveyed by the media had previously predicted that the number of new jobs in January would be only 25,000, and the unemployment rate was expected to rise to 6.8%. However, the actual data exceeded market expectations for the second consecutive month, and the decline in the unemployment rate indicates that the job market is gradually warming up.

Despite the decrease in the unemployment rate, the total number of unemployed individuals in Canada remains around 1.5 million, indicating that the job market still faces challenges. Statistics Canada stated, "This indicates that, despite the recent strong job growth, many unemployed individuals are still struggling to find work."

In 2023, the Canadian economy has been in a sluggish state, and significant interest rate cuts have not effectively stimulated consumer spending and business investment. However, the Bank of Canada stated last month that the job market remains weak but has shown signs of improvement. The rapid interest rate cuts of 200 basis points implemented by the central bank are helping to boost business activity and drive consumer spending growth.

Although signs of recovery are emerging in the job market, future economic growth still faces challenges. The threat of the United States imposing tariffs on Canadian goods and a sharp decline in immigration numbers may impact economic activity. The latest survey by the Bank of Canada shows that many businesses are cautious about hiring this year. Economists indicate that if the U.S. implements tariffs, the Bank of Canada may have to continue cutting interest rates to support economic growth.

Meanwhile, the Canadian dollar rose slightly by 0.1% after the employment data was released, trading at 1 Canadian dollar to 1.4296 U.S. dollars, or 69.95 cents. Following the employment report, market bets on a 25 basis point rate cut by the Bank of Canada in March dropped from 72% to 58%.

Statistics Canada pointed out that the new jobs added in January were relatively balanced between part-time and full-time positions, mainly concentrated in the manufacturing, professional, scientific, and technical services sectors. Additionally, the employment situation for the youth group (ages 15-24), which has a high long-term unemployment rate, has improved. Employment in this age group increased by 1.1%, and the unemployment rate fell from 14.2% to 13.6%.

In terms of wages, the average hourly wage for permanent employees in Canada increased by 3.7% year-on-year in January, slightly lower than the revised 3.8% in December last year. The slowing wage growth is one of the inflation trends closely monitored by the Bank of Canada, which may influence its future monetary policy decisions.

Furthermore, the employment rate (the proportion of the population aged 15 and older that is employed) rose by 0.1 percentage points to 61.1%, achieving growth for three consecutive months