09:03 AM EST, 01/10/2025 (MT Newswires) -- The Canadian labor market added 91,000 jobs in December, with the majority full-time positions, noted Desjardins.

Strength was relatively broad-based across a variety of sectors, said the bank after Friday's Labour Force Survey (LFS).

In addition, with population growth slowing further and labor force participation unchanged in December, the solid employment growth pushed the unemployment rate down one tick to 6.7%.

All this comes in contrast to economists' expectations which saw only 25,000 new jobs added and the unemployment rate rising to 6.9%, stated Desjardins.

Total hours worked in the economy were up a "very robust" 0.5% month over month, likely in part due to employees returning to jobs after labor disputes, pointed out the bank. Despite the sharp increase in employment, the 12-month rate of average hourly wages for all employees decelerated down to 3.8%, the slowest pace since May 2022.

The bank's tracking for Q4 gross domestic product now stands at roughly 2.5%, above the central bank's forecast of 2.0%.

Given the still-elevated unemployment rate and the cooler wage readings, the latest labor market data still leave the Bank of Canada in a position to cut rates, added Desjardins. With more aggressive United States tariff threats weighing on business confidence and the recent rise in global bond yields tightening domestic financial conditions since the last policy decision, the bank's rates outlook remains intact.

Desjardins still sees the BoC cutting rates later this month, but then pausing in March. In its base case, which includes at least some tariffs on Canadian exports to the U.S., the bank still believes that the policy rate will need to fall to around 2.00% in this cycle.