January's labour data is expected to show increased unemployment despite job additions
The upcoming Canadian jobs report, scheduled for release on Friday, will likely show an uptick in the unemployment rate despite modest job growth, according to Royal Bank of Canada (RBC).
RBC said the data will mirror the trends of 2023, where employment increases failed to offset the rising unemployment rate, likely reaching 5.9% in January, up from 5% the previous year. This would mark the highest unemployment rate since January 2022, during the pandemic's economic aftermath.
Despite an expected addition of 10,000 jobs from December, the pace is insufficient to match the country's unprecedented population growth, according to the report.
Indeed.com reported a 6% drop in job postings in January compared to December, indicating reduced opportunities for labour market entrants, particularly affecting students and recent graduates who have significantly contributed to the unemployment rate increase in recent months.
Although average hourly earnings have shown resilience, with potential for further increases as unionized worker contracts adjust to inflation, forecasts predict a slowdown in wage growth aligned with diminishing hiring demand.
Read more: Canadian economy grows, beats expectations
In addition to employment data, the upcoming week will shed light on Canada's trade dynamics for December, with projections indicating a reduction in the trade surplus to $1.2 billion from November. The anticipated decrease in exports, estimated at -2.2%, is attributed to diminished motor vehicle shipments and oil prices, reflecting a downturn in motor vehicle production.
The US trade balance for December is also expected to show a narrowed deficit of $-61.1 billion from November's $-63.2 billion, supported by a $900 million reduction in the goods sector deficit, propelled by a 2.5% increase in goods exports and a 1.3% rise in goods imports.
