04:20 PM EST, 01/10/2025 (MT Newswires) -- The Toronto Stock Exchange closed lower on Friday, falling back under the 25,000 mark with most sectors lower despite an unexpectedly robust December jobs report.

The S&P/TSX Composite Index closed down 305.63 points to 24,767.73. The biggest decliners were Health Care, down 4.38%, and Financials down 1.81%. Battery Metals and Energy were the sole gainers, up 2.65% and 1.05% respectively.

Gold prices rose late afternoon even as the dollar and treasury yields surged after the United States reported hiring rose much more than expected in December. Gold for February delivery was last seen up US$25.10 to US$2,715.90 per ounce, returning above the US$2,700 mark for the first time since Dec.12.

West Texas Intermediate (WTI) crude oil closed at a three-month high after the Biden Administration imposed additional sanctions on Russia's oil exports. West Texas Intermediate crude for February delivery closed up US$2.65 to settle at US$76.57 per barrel, the highest since Oct.7, while March Brent crude closed up US$2.84 to US$79.76.

Statistics Canada reported Canada added 90,900 jobs in December, up from 50,500 a month earlier and well ahead of the consensus estimate for a rise of 20,000 jobs, according to FastSet.

The report was clearly better than anticipated and, if mirrored by other data, "could signal a slower pace of interest rate cuts ahead than we were previously anticipating," CIBC Economics' Andrew Grantham noted. However, with rates still above the mid-point of the neutral range, unemployment elevated relative to a year ago, and huge uncertainty emanating from the threat of U.S. tariffs, "we continue to forecast a 25bp reduction at the January meeting and a 2.25% trough for the overnight rate later this year.".

"Despite the positive end to the year, the unemployment rate is still 1% higher than it was as 2024 began, signaling a build up of slack within the economy," says Grantham. "Because of that we continue to expect further interest rate cuts from the Bank of Canada in 2025, including a 25bp reduction at the next meeting later this month."

The increase in employment was reasonably broad based by industry, led by education, transportation and finance. Full time positions increased by 57,000, with part-time jobs up by 33,000, with public sector paid employment a strong 40,000-plus for a second month in a row, with healthy advances in private positions and self employment.

By age, employment surged by 62,000 for persons aged 55 and older, with prime-aged (25-54) up by a more modest 30,000.

"Population growth (+67K) is slowing, but is still much swifter than what we have seen recently in the quarterly count, which may have flattered some of the headline figures slightly if the LFS is still playing catch up," says Grantham. "That said, the increase in employment was still strong enough to see the jobless rate tick down to 6.7%, against consensus expectations for an increase to 6.9%."

Even though the unemployment rate ticked down in December, there was still evidence that elevated joblessness was more widespread among demographic groups than it was earlier in the year. Last April, all of the increase in unemployment relative to the same month of 2022 was driven by newcomers into the country or young people.

"In December, those two groups accounted for just over half of the rise in joblessness relative to 2022, with unemployment in other areas (including prime aged persons living in Canada for more than 5 years) also now having risen relative to the post-pandemic lows," says Grantham.

Despite the strong employment gain and slight decline in the unemployment rate, wage growth for permanent employees continued to decelerate, reaching 3.7%, from 3.9% in the prior month.

RBC's Assistant Chief Economist Nathan Janzen on 'The Bottom Line' to today's Canada jobs data, states that the December labor market numbers are "clearly firmer than expected," with headlines and details broadly better than feared.

While the data is notoriously volatile, and the unemployment rate is still up almost a percentage point from a year ago and at its second highest level (outside of the 2020/21 pandemic) since 2017, "we continue to think it is unlikely that the broader uptrend in the unemployment rate has ended (the 3-month average rate continued to rise in December) with hiring demand (job openings) still running well below year-ago levels."

The Bank of Canada already flagged in December that with interest rates no longer clearly at 'restrictive' levels, and inflation running back around the central bank's 2% target, the pace of rate cuts will be more gradual, and contingent on the evolution of economic data, going forward.

"We continue to expect that ultimately the BoC will need to cut the overnight rate to slightly 'stimulative' levels this year -- below the 2.25% to 3.25% the BoC currently estimates as the likely range for the current neutral rate," states RBC.