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Recul unemployment rate at 5.7% in Canada in January

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The Canadian economy generated 37,000 more jobs in January.

The Canadian Press

The Bank of Canada may be in no rush to cut interest rates after Statistics Canada reported a larger-than-expected job gain last month, economists say.

The federal agency's labor force survey released Friday indicates the economy added 37,000 jobs in January, after several months of almost -no change in this indicator.

Canada's unemployment rate slipped 0.1 percentage points to 5.7% last month, marking its first decline since December 2022.

In Quebec, employment changed little for a fourth consecutive month in January and the unemployment rate reached 4.5%, down 0.2 percentage points.

I would say the labor market is tighter than expected, but not necessarily stronger than expected, said Andrew Grantham, director of economics at CIBC. That's because, certainly, employment continued to grow a little faster than the consensus expected. But that's really nothing compared to the sharp increase in the population.

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The Canadian population aged 15 and over has grew 0.4% between December and January, far outpacing the 0.2% growth in employment.

The labor market cooled significantly in 2023 as high interest rates weighed on consumer spending and business investment, pushing the nation's unemployment rate up 5.1% in April to 5.8% in December.

Even though the jobs report has some weaker elements, the condition is relatively good labor market conditions suggest to economists that the central bank can take its time when it comes to cutting interest rates.

Today's data certainly won't accelerate the Bank of Canada's timetable, Grantham said.

< p class="StyledBodyHtmlParagraph-sc-48221190-4 hnvfyV">CIBC is not changing its forecast on the timing of the first rate cut, as it still expects the central bank to lower its key rate starting in June. But she now expects the bank to cut rates overall by a smaller amount this year.

Employment rose across several sectors in January, with gains led by wholesale and retail trade as well as finance, insurance, real estate, rental and leasing.

Meanwhile, accommodation and food services saw the largest employment decline.

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Employment increased in several sectors in January.< /p>

Workers' wages continued to grow rapidly last month as Canadians seek compensation for past inflation. The average hourly wage, which has been growing steadily at an annual rate of 4 to 5 percent, jumped 5.3 percent from the same month last year.

Statistics Canada says wage growth has been stronger for women and higher-income earners. Although men continue to earn more on average than women, women's average hourly wages increased by 6.2%, compared to 4.4% for men.

For employees in the top 25% of the pay scale, their salaries increased by 5.9%, compared to 4.6% for those in the bottom 25%.

The Canadian labor market has been supported by strong population growth, driven by permanent and temporary immigration.

Compared to the ;last year, the economy created 345,000 jobs, while the working-age population increased by one million people.

As the Bank of Canada maintains its key interest rate at 5%, economists' forecasts suggest unemployment will rise throughout this year.

Employment rose 0.03% in Ontario. In Nova Scotia it rose 0.7%, but from December to January the unemployment rate jumped from 5.9% to 7%.

Compared to the previous month, the unemployment rate increased in New Brunswick, from 6.3% to 6.6%. Meanwhile, it declined in Prince Edward Island, from 8.1% to 7.4%.

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