CALGARY—Economists used words like “unbelievable,” “astonishing” and “impressive” to describe 13 straight months of job creation in Canada that culminated in a more-than-40-year-low unemployment rate of 5.7 per cent in December.
But they also warned Jan. 5 the economic swell will likely result in the Bank of Canada raising its key overnight interest rate by 25 basis points later this month to 1.25 per cent.
Statistics Canada reported the largest employment gains in December were observed in Quebec and Alberta, with the former adding 27,000 jobs for a 4.9 per cent unemployment rate and the latter generating 26,000 jobs for a rate of 6.9 per cent.
Stefan Marion, chief economist at National Bank in Montreal, said the month carried forward a trend that has seen Quebec generate 87,000 jobs in 2017, with 81,000 of them considered full-time.
“It’s as good as it was last year and it’s again driven by Montreal, so 60,000 of that 87,000 jobs is Montreal,” he said.
Job creation has been so successful that there are reports of regional labour shortages, he said, adding that Quebec’s unemployment rate now beats the national mark by a record amount.
Employment rates have risen across a wide assortment of industries, with big gains seen in jobs for immigrants and women, he said.
“We’re probably going to see another year in 2018 of above-potential growth for the Canadian economy and for Quebec and, again, for Quebec, it will be still driven by Montreal,” said Marion.
Meanwhile, Alberta added 55,000 workers in 2017, the best performance since 2014, Statistics Canada said.
The province’s economic output per capita has been stronger than anywhere else in Canada even at the depths of the recent recession and it is recovering more quickly that most expected, said University of Calgary professor Trevor Tombe.
“If any economy was able to absorb a shock of magnitude that we did from low oil prices, it’s Alberta,” he said, adding the recovery is reflected in statistics for manufacturing, trade, exports, earnings and oil production, as well as job creation.
He said the new jobs in Alberta in 2017 were created mainly in manufacturing, wholesale trade and resources, with most of those jobs likely related directly or indirectly to more oilfield activity as oil prices strengthened.
“All indications are the recovery is going to continue through 2018, (but) unlikely at the rapid rate we saw in 2017,” said Tombe.
Alberta Finance Minister Joe Ceci agreed Friday the numbers show the provincial economy is recovering but said the recovery would be even more impressive if export pipeline capacity was expanded.
“There’s no secret, we need to see pipelines to tidewater,” he told reporters. “We need to see that happen so that we can get world oil prices and not get a discount for every barrel that goes to the States.”
Higher oil prices and the stronger but still low level of the loonie in relation to the U.S. greenback are helping with exports and manufacturing job creation centred in Ontario, observers agreed.
“Full-time employment accounts for nearly all of the 423,000 increase in jobs through the course of 2017,” said CIBC senior economist Nick Exarhos.
“In sectors where we’d like to see more hiring, we got it, most notably in manufacturing, up a bit over 85,000 in 2017, and resources, a sector creating a massive drag on employment over the past two years.”
He said the economic strength prompted CIBC to move up its forecast for an interest rate hike from April to January but inflation remains under control, removing any immediate risk of an overheated economy.
Job creation numbers follow Canadian economic signals that have been positive for some time, said TD Economics senior economist Brian DePratto.
“If you go back and look at the economic growth figures Canada was putting out late last year, early this year, we saw very, very robust growth across effectively all sectors of the economy,” he said.
“I think to some extent we’re seeing catch-up activity from the output of the economy on the employment side.”
Matthew Stewart, director of national forecast for the Conference Board of Canada, said he is concerned about a tight labour market going forward but added business should be pleased with wage increases shown by the statistics.
“Slower more sustainable job growth is in store for the year ahead,” he said in a statement.
“Arguably the best news was the continued pick up in wages which should help sustain consumer spending in the year ahead.”