08:18 AM EST, 01/10/2025 (MT Newswires) -- Canada will release December's Labour Force Survey (LFS) at 8:30 a.m. ET on Friday, noted Scotiabank.

The bank sees 15,000 job gains, below the 25,000 consensus while it predicts an unemployment rate of 6.7% while the consensus is 6.9%. It also expected a "sharp" increase in wages.

Scotiabank thinks the role played by distorted seasonally adjusted (SA) factors in November should be neutralized in December. SA factors understated the 50,500 job gain in November by going with the second-lowest SA factor on record for like months of November. November SA factors have been on the low side for each of 2021, 2022 and 2024 but not 2023.

However, there isn't the same evidence from recent years for December SA factors that have been all over the map comparing like months over time. As a consequence, SA factors shouldn't be an issue this time.

SA factors might be distorting for the full-time versus part-time mixture though. Statistics Canada applied the lowest full-time jobs SA factor on record for like months of November to tamp down what was a strong 54,000 gain in full-time jobs and the third highest part-time jobs SA factor to tamp down a modest 4,000 drop in part-time jobs. They netted out, pointed out the bank.

There aren't many advance indicators in Canada, stated Scotiabank. One thing to point to is that CFIB small business hiring plans have moderated away from a strong upward bias until mid-2024 to those planning to hire and those playing to reduce workforces roughly netting out now.

The reason the bank expects the unemployment rate to tick down is that it thinks there will be more labor force weakness than employment weakness. The month of November registered a whopping 138,000 gain in the labor pool for the biggest gain since September 2021. That's very unlikely to repeat and pretty unlikely to drop and maybe by quite a bit.

That labor force and population surge was fed by non-permanent residents (temps) comprised of international students, temporary foreign workers and asylum seekers -- mostly the first two. Temps have driven most of the rise in the unemployment rate since January 2022.

At some point, the efforts that have been rolled out to tighten the flow of temps should drive weaker labor force growth. Scotiabank is confident that will happen on a trend basis and population growth should grind to a halt over 2025-26 if not contract, but timing that on a monthly basis is difficult and with survey noise complicating things further.

Wage growth is expected to jump higher, barring revisions. Average hourly earnings of permanent employees plunged by 5.5% month-over-month seasonally adjusted annual rate (SAAR) in November for the biggest plunge since June 2020. The prior month was up 8.3% month-over-month SAAR.

The bank estimates it will probably see a strong gain in the volatile series. The year-over-year gain in real wages, however, continues to rise.

Scotiabank doesn't have conviction on hours worked but they may slip. The strike by 55,000 post office officials ended with a back-to-work order on Dec. 17 and they returned to work days later. That's after the LFS reference week that this time is for the Dec 8-14 week.