Unemployment rate sinks to eight-month low as Ottawa-Gatineau firms ramp up hiring

Downtown Ottawa

Employers in the National Capital Region collectively added 3,300 net new jobs in December to close out the year nearly exactly where the local labour market started in 2017, Statistics Canada reported Friday.

Last month’s hiring helped push the region’s unemployment rate to 5.5 per cent, down from 5.8 per cent in November and the lowest rate since April 2017.

In another piece of good economic news, the size of the local labour force grew as more residents began searching for work.

The good jobs news came despite the region’s largest employer, the federal government, shedding 5,600 employees and contractors who self-identify as public servants. The number of public administration staff working for the federal government has fluctuated widely since mid-2016, when the local headcount was 127,500, according to Statistics Canada data.

It quickly grew to 153,800 by May 2017 without explanation – a Treasury Board spokesperson told OBJ last year that “the size and make-up of the Public Service has and will continue to fluctuate in response to the priorities of the government” – before starting to decline.

The number of federal bureaucrats in Ottawa-Gatineau stood at 128,900 last month, down four per cent from 134,500 in November.

However, several other sectors picked up the federal government’s slack. Gains were highest in Ottawa-Gatineau’s hospitality and food services industry, which added 5,300 staff last month, and the educational sector, which was up by 4,000 positions.

The closely-watched tech sector added 900 staff.

While December’s labour force survey painted a positive picture for the local economy, the gain in jobs brings the total number of employed residents to 724,800 – nearly the exact same level as January 2017.

Nationally, job creation in 2017 reached a pace not seen in a calendar year since 2002, which reduced Canada’s unemployment rate to its lowest mark in more than 40 years.

Statistics Canada's job numbers Friday offered a year-end look at a healthy 2017 performance. The surprisingly strong run was capped off by a December report that led some forecasters to cement, or even move up, their predictions that the Bank of Canada would raise its benchmark interest rate, possibly as early as this month.

In December, the unemployment rate dropped to 5.7 per cent, down from 5.9 per cent the month before, to reach its lowest mark since comparable data became available in 1976. The rate fell as the economy generated 78,600 net new positions, including 23,700 full-time jobs.

Looking at 2017 as a whole, employment rose 2.3 per cent for its fastest growth rate in 15 years. Over the past 12 months, the economy added 422,500 jobs with the gains driven by 394,200 new full-time positions, the agency's labour force survey said.

In December 2016, the unemployment rate was 6.9 per cent, the report said. The last time the jobless rate was 5.8 per cent was October 2007.

Several analysts said Friday's solid labour report might be enough to encourage Bank of Canada governor Stephen Poloz to introduce another interest-rate hike later this month. Poloz has raised the rate twice since the summer, citing the stronger economy.

“It looks like as much as Canadian economic growth has softened a little bit over the second half of the year, the labour market is just still rolling right on,” said BMO senior economist Robert Kavcic.

“We know the Bank of Canada is back into a rate-hike mode and they are pretty well data-dependent right now in terms of when and how quickly that pace of rate hikes is going to play out.

“This is pretty obviously one vote in favour of the bank certainly moving in March, if not bringing that forward to raising rates in January.”

Still, Kavcic remains a little bit hesitant to predict that a rate increase at the Jan. 17 policy meeting is a sure thing.

He expects Poloz to carefully assess the findings in the Bank of Canada's business outlook survey, which will be released Monday. The central bank also might wait a little longer months into 2018 to analyze the economic impacts of new changes to mortgage stress tests, Kavcic added.

Other experts, however, think the December report will be enough to convince the central bank to raise the rate sooner rather than later.

“We think that today's report is enough to push governor Poloz into a rate hike later this month,” CIBC economist Nick Exarhos wrote Friday in a research note to clients.

By region, Quebec and Alberta saw the biggest increases last month with each province adding more than 26,000 new jobs. Quebec's unemployment rate fell 0.5 percentage points to 4.9 per cent, while Alberta's dropped 0.4 percentage points to 6.9 per cent.

The December reading marked the 13th straight month of job gains. However, about half of those positive numbers were within the survey's margin of error.

Looking back at 2017, factories saw employment increase 3.5 per cent, while the services sector experienced a boost of two per cent. The number of public-sector employees rose by 2.3 per cent compared to a 1.8 per cent increase in paid positions in the private sector.

In a separate report Friday, Statistics Canada says the country's merchandise trade deficit widened to $2.5 billion in November, compared to a $1.6-billion deficit the month before, as imports outgrew exports.

– With reporting by the Canadian Press