08:46 AM EST, 01/13/2025 (MT Newswires) -- Canadian employment came in stronger than expected in December, with the Labour Force Survey (LFS) showing a 90,900 jump in the biggest monthly gain since January 2023 in jobs after the 50,500 run-up in November while consensus was for 25,000 gains, noted Rosenberg Research.

The employment increase was led impressively by a 57,500 expansion in full-time positions and was broadly based across sectors and regions. Combined with a -0.1 ppt dip in the unemployment rate to 6.7% -- the participation rate held steady near its post-COVID cycle low, at 65.1% -- this is sure to catch the eye of the Bank of Canada, ratifying its newfound "go slow" approach, said Rosenberg Research.

The service sector -- 68,400 higher -- accounted for the vast majority of job creation, complemented by a 22,500 rise in goods-producing employment. Manufacturing (+13,100) and construction (+6,100 following a +18,400 increase prior) led the way on the goods front, in a sign that rate cuts and a weaker Canadian dollar may be starting to filter through.

Retail/wholesale trade (-7,800) and accommodation/food services (+9,000; weakest in three months) left something to be desired as it pertains to discretionary consumer spending. This was offset by a rise in finance and real estate (+15,900), transportation (+16,600), educational services (+17,400), and health care (+15,500; best month since August).

Hours worked rebounded by 0.5% month over month in December following November's 0.2% falloff. But zooming out to Q4 overall reveals just a puny +0.1% annualized increase on this front, the weakest pulse since Q4 2023.

So companies are expanding payrolls, but are limiting the number of hours worked. Not a particularly positive readthrough on corporate profitability given its relationship with productivity, stated Rosenberg. Again, surely not to be of much concern to the BoC.

In fact, there had been a sufficient build-up of prior labor market slack that, even with an acceleration in job gains, hourly wages for permanent employees slowed to +3.7% year over year from +3.9%, undercutting the +3.8% expectation in the process.

Rosenberg hasn't seen the pace this low since April 2022. For all employees, wages grew by just +0.2% month over month. It has been at this pace, or lower, in three of the past four months.

Nothing in Friday's LFS to shift the BoC away from rate cuts, even if the pace is slowing -- odds of a January rate cut fell a touch to 70% from 80%, though two cuts are still priced in for all of 2025, according to Rosenberg.