Big six bank economists expects rise in unemployment
Canada’s latest employment data will be released later this week and could signal some softening of the labour market.
RBC Economics’ Nathan Janzen and Carrie Freestone are expecting the unemployment rate to tick higher to 6.9% for December compared to 6.8% in November when Statistics Canada publishes the data Friday.
They also expect 10,000 jobs to have been created in the month but note that during 2024 job creation has not kept pace with labour market growth (329,000 jobs vs. 605,000 participants) while wage growth has been resilient but may slow as job openings ease and unemployment rises.
The economists believe the Bank of Canada will continue to cut interest rates this month and through to the summer amid signs of a weakened Canadian economy.
However, on the labour market, there has been positive sentiment in recent surveys of employers. Just before Christmas an Express Employment Professionals-Harris Poll survey revealed that 71% of companies that took part feel positive about their hiring outlook over the coming year, with 39% feeling optimistic, 36% feeling confident, and 35% feeling hopeful.
The research found that around half of respondents plan to increase their headcount in the first six months of 2025, mostly due to managing increased volumes of work (58%), filling newly created positions (45%), addressing employee turnover (38%), getting expertise in new areas (26%), and handling expansion into other categories or markets (26%).
“There is a lot of optimism in the market going into 2025,” according to Brent Pollington, an Express franchise owner in Vancouver, British Columbia. “The positive outlook seems to stem from a combination of factors including market conditions, perceptions of continued growth, and the potential for lowering interest rates, among other things.”
The main barriers to hiring include the ongoing skills shortage and the cost of hiring.
“The positive sentiments among hiring managers highlight a resilient and forward-thinking workforce,” said Bill Stoller, Express Employment International CEO. “Businesses are strategically positioning themselves for growth, addressing immediate needs like increased workloads and turnover, while also preparing for future challenges such as AI and cybersecurity. The outlook for 2025 is promising, driven by a workforce ready to innovate and adapt.”
Separate polling by Robert Half Canada reported a slight dip in hiring intentions but 46% of companies said they plan to add new permanent positions in the first half of the year, and another 49% plan to fill vacated positions. More than half are increasing the number of contract professionals to aid with projects in 2025.
