Canada’s December jobs data delivered a surprisingly strong headline: the economy added 91,000 payroll positions, lifting the unemployment rate to 6.7% from 6.8% in November. The outturn comfortably surpassed economist expectations and is set to intensify the deliberations ahead of the Bank of Canada’s upcoming policy decision. Analysts had anticipated roughly 25,000 jobs and a modest uptick in the unemployment rate to about 6.9%, making the December surge both notable and potentially consequential for the central bank’s path of interest-rate moves.
This broader picture suggests a labour market that finished the year with notable momentum, yet with important nuances beneath the surface. The data show that a meaningful portion of the December gain came from public-sector hiring, even as solid increases spread across various sectors such as education, transportation, and warehousing. At the same time, the participation rate remained relatively steady, and hours worked rose by 0.5% month over month, a signal that the labour market’s pace was not simply a function of workers returning to strike-related jobs but a broader reacceleration in activity. The combination of stronger employment and a softer wage trajectory kept the debate about the Bank of Canada’s policy course firmly on the table.
The December Jobs Pulse: The Numbers, the Pace, and the Hidden Signals
The headline figure of 91,000 new jobs in December stands in stark contrast to the expectations that were widely reported by analysts. With the unemployment rate dipping to 6.7%, the labour market’s resilience is evident even as the overall rate remains above the long-run target and the levels seen before the more disruptive phases of the pandemic. The market’s reaction to this outperformance hinges on the mix and sustainability of the gains, as well as the underlying inflation trajectory that policy makers are watching closely.
One of the most critical dimensions of the December report concerns the composition of the job gains. While the overall tally is robust, nearly half (about 44%) of the total increase in employment came from the civil service sector. This is a meaningful deviation from previous months, where public-sector hiring had accounted for a larger share of the job growth. In October and November, for example, roughly six-tenths of the employment uptick could be traced to the civil service, signaling a shift in momentum toward government-driven expansion at year-end. The December data thus paint a more nuanced picture: public-sector hiring provided a notable contribution, but the gains were also widespread across multiple private-sector industries, including education, transportation, and warehousing. This cross-sector strength suggests that the December surge was not merely a one-off blip tied to one segment of the economy but a broader rebound in economic activity.
Another important facet is the trajectory of population growth and its interaction with employment. December saw a population increase of about 67,000, the smallest rise in two years, which points to the possibility that federal immigration policy adjustments are beginning to influence the pace at which newcomers are entering the labour market. The presence of a large pool of new entrants historically has supported labour supply, but if job creation does not keep pace, unemployment pressures can persist even in the face of strong headline employment numbers. The December data thus raise questions about the balance between the inflow of workers and the economy’s ability to absorb them.
Hours worked also provided nuance to the headline story. The index of total hours worked rose by 0.5% from the prior month, and analysts attributed at least part of this increase to a portion of striking workers returning to their jobs. If a sizeable share of the hours growth is tied to one-off or temporary labour market adjustments, the sustainability of the hours uptick could come under closer scrutiny in subsequent releases. In addition, wage dynamics remained a key area of focus for policymakers and forecasters. Average hourly wages showed signs of cooling, a development that tends to ease inflationary pressure and supports a scenario in which the central bank could pursue a more gradual easing path if other conditions align.
From a year-over-year perspective, the unemployment rate’s decline in December did not erase the fact that it remains higher than the level a year earlier, when unemployment stood at 5.8%. The year-over-year comparison underlines the underlying slack that can still exist in the economy even as a single, strong month of hiring pushes the headline rate lower. For wage growth, the deceleration is notable: wage acceleration has cooled since peaking in the years leading up to the pandemic, and the December data contribute to a broader narrative in which wage pressures may be stabilizing or moderating, reducing some upside risk to inflation.
The labour market’s sectoral distribution remains an area of keen interest for observers who are trying to read the underlying health of the economy. The December gains extended across several sectors beyond public administration, with education, transport, and warehousing among the notable beneficiaries. This diversified strength hints at a more balanced growth dynamic rather than a one-off surge tied to government hiring alone. Yet the heavier reliance on public-sector staffing suggests that private-sector momentum may be more fragile than the headline numbers would indicate, a nuance that policy makers will weigh as they calibrate monetary policy and contemplate future stimulus.
Together, these pieces—strong headline jobs, a shift toward public-sector contributions, modest but meaningful gains in hours worked, and a cooling in wage growth—compose a complex portrait of a labour market that is robust in some dimensions while remaining imperfectly tight in others. The December dataset thus offers both reassurance and caution: reassurance that the economy is continuing to create jobs and absorb labour supply, and caution that the pace and breadth of private-sector hiring, wage dynamics, and labour-force participation will continue to shape the Bank of Canada’s policy calculus in the months ahead.
In sum, the December labour market outturn confirms an economy that remains resilient, yet with a nuanced mix of drivers. The public sector’s larger role, a steady but tempered wage growth pattern, and a notable but potentially temporary uptick in hours worked all contribute to a story in which the BoC faces a delicate balancing act between fostering growth and anchoring inflation near target. As policymakers parse the data, the question remains whether January’s policy stance should hinge on a single month’s performance or on a broader, multi-month trend that weighs structural dynamics such as immigration, private-sector hiring, and the evolution of wage pressures.
Public Sector Hiring, Private-Sector Momentum, and the Immigration Bridge
A distinguishing feature of the December employment surge is the relative contribution of the civil service to the net job gain. With nearly half of the 91,000 new positions attributed to public-sector staffing, the December numbers underscore that government hiring played a prominent role in the month’s labour-market performance. This development invites careful interpretation: while public-sector hiring can reflect seasonal or policy-driven activity, it can also signal broader demand conditions, depending on the context and the sustainability of such hiring in the near term. When a substantial share of job creation is concentrated in the public sector, analysts often look to private-sector momentum to gauge the economy’s underlying health and the job-creating engine that ultimately governs sustainable growth.
The shift from a previously heavier public-sector contribution toward a more balanced mix in December does not erase the earlier pattern, but it does alter the narrative about what is driving the labour market’s strength. For observers, this nuance matters because it can influence the Bank of Canada’s assessment of demand-side pressures and the need for policy adjustments. If public-sector hiring is ramped up in response to fiscal priorities or administrative needs, it may be more transitory than private-sector hiring, which tends to reflect broader business investment and consumer demand cycles. The December data therefore invite a closer look at whether the private sector can re-accelerate its hiring activity in the coming months without triggering wage acceleration that would push inflation higher.
Another key factor shaping the December picture is the evolution of population growth and immigration. The reported 67,000 population increase in December marks the smallest monthly rise in two years, a development that is consistent with expectations that changes in immigration policy could be influencing the pace at which newcomers enter the labour market. In recent years, Canada has drawn record numbers of immigrants, which has contributed to the growth of the labour supply. However, the absence of a commensurate rise in private-sector hiring may indicate that the fresh entrants are encountering a labour-market environment in which job creation is not as robust as the influx of new workers would suggest. When talent enters the market at a pace that surpasses job openings, unemployment can remain sticky or even rise again, even in a month with a strong headline employment figure.
The December data also draw attention to the dynamic interplay between job creation, vacancies, and the overall health of labour demand. The data indicate that private-sector hiring—often a stronger signal of underlying demand—has shown signs of weakness. In this context, a strong month of job gains in December, driven partly by the public sector, can be interpreted as an indication of policy capacity to support the economy through targeted spending and administrative expansion, while the private sector recalibrates its hiring pace in response to macroeconomic conditions, consumer demand, and global trade tensions.
For policymakers and market watchers, the key question is whether this December performance can be sustained in the near term. If private-sector momentum falters further, the Bank of Canada may need to maintain a cautious approach to rate movements, weighing the risks of delaying an adjustment against the need to avoid overheating the economy if inflation unexpectedly accelerates. Conversely, if subsequent data demonstrate renewed private-sector hiring strength, wage growth trending higher, and an improving job vacancy environment, the BoC could be more inclined to pursue a more proactive policy stance. The December data, with its notable public-sector contribution and its implications for private-sector momentum and immigration dynamics, thus set the stage for a nuanced, data-dependent policy path as Canada enters 2025.
Wage Growth, Hours Worked, and Inflationary Pressures: The Nexus for BoC Policy
Wage dynamics occupy a central position in the Bank of Canada’s deliberations. The December report’s indication of cooling wage growth, alongside a stronger headline jobs number, adds a complex layer to the inflation outlook. Policymakers have long warned that wage growth can fuel sustained inflation if it remains too robust, even as unemployment declines. The observed slowdown in wage growth in December provides some relief to the central bank and supports the case for a more gradual easing path, should other conditions align.
The monthly data showing a 0.5% rise in total hours worked is notable for its implications about broader labour-market slack and the utilization of available capacity. Some portion of this hours growth is attributed to returning workers who had been on strike, which suggests a temporary dimension to the increase. If the hours rise sustains beyond seasonal or episodic factors, it would point to a stronger utilisation of the workforce and a higher level of economic activity, potentially increasing the probability of above-target inflation if wage pressures begin to re-accelerate. The interplay between hours worked and wage growth thus remains a key gauge of the economy’s temperature.
From a macroeconomic perspective, the December report contributes to a narrative in which the labour market remains relatively loose by historical standards, even as it shows pockets of strength. Oxford Economics, for example, emphasizes that there remains substantial slack in the labour market—there are still many people seeking work—which could push the unemployment rate higher again in early 2025. This view implies that, despite the December strength, the BoC can afford to move cautiously, especially given that inflation has been moving toward, and occasionally below, the two percent target. Wage growth’s deceleration further reinforces the case for a measured approach to rate movements rather than abrupt changes that could destabilize other parts of the economy.
The policy implications are nuanced. If wage growth continues to ease and the unemployment rate shifts higher again, the BoC could find room to lower its policy rate gradually without fearing a sudden overheating. That is consistent with a stance that prioritizes balancing growth support with inflation control. Conversely, if wage pressures pick up again or if hours worked accelerate in a sustained manner, the central bank could need to move more cautiously to avoid reigniting inflation. In light of these dynamics, December’s wage data reinforces the sense that the BoC’s policy path will be highly data-dependent and sensitive to the balance between slack, wage inflation, and global price pressures.
Analysts have framed the December data through various lenses. Desjardins’ Royce Mendes argues that the labour-market momentum, combined with a mix of full-time gains and sectoral breadth, supports a continuation of a policy path that includes a rate cut followed by a pause. Mendes suggests that the BoC could cut in January and pause in March, with the ultimate trajectory bringing policy rates down toward the two percent level. His view underscores a belief that inflation remains sufficiently contained to justify a gradual easing that does not overshoot support for the economy.
Capital Economics’ Bradley Saunders, noting the strong headline figure but a composition skew toward public-sector hiring, contends that the December gains may not be a reliable signal of ongoing momentum in the private sector. He sees a case for a cut in January but acknowledges the data’s mixed signals, which can argue for a more cautious approach that weighs both the short-term strength and the longer-run questions about job creation across sectors.
Oxford Economics’ Michael Davenport highlights a robust year-end performance coupled with the reality of slack in the labour market. He cautions against overreacting to one month’s data, noting that slack can persist and that unemployment may rise to about seven percent in early 2025. Davenport’s assessment keeps the BoC on a path that favors measured rate reductions, aiming to avoid pre-empting inflation dynamics while still supporting growth.
RBC’s Nathan Janzen brings a more cautious perspective on December’s strength. He notes the volatility of monthly unemployment figures and the possibility that the unemployment rate will resume climbing. He suggests that the Bank of Canada may slow the pace of rate cuts to 25 basis points if inflation remains near target but the labour market signals begin to tilt toward looseness. He also emphasizes that the BoC’s earlier message about moving to a “stimulative” level—below the neutral rate—could still guide policy toward a shallower path in the near term.
National Bank of Canada’s Kyle Dahms and Matthieu Arseneau emphasize the risks to growth from a still-tepid private sector and external factors such as tariff policies. They point out that despite the December gains, the majority of the employment increase did not come from private employers and caution against overinterpreting a single month’s data as a blueprint for future labour-market performance. They argue that the Bank of Canada’s path to a more stimulative stance—toward the lower end of the neutral range—could materialize if the macro environment supports it, but such a move would depend on the trajectory of inflation and the broader growth outlook through mid-year.
Overall, the December numbers reinforce the central tension at the heart of BoC policymaking: how to balance the desire to support growth with the need to prevent a re-acceleration of inflation amid ongoing global price pressures. The consensus among many analysts is that a cautious, data-driven approach remains appropriate, with the potential for a modest rate reduction in January, followed by a pause and a possible further easing if conditions warrant. The balance of risks—tariffs, inflation dynamics, wage growth, and labour-market slack—will continue to shape the central bank’s decisions in the near term.
Inflation, Immigration, and the Growth Outlook: Intersections of Policy and Demography
Beyond the immediate numbers, the December data bring to the fore longer-term questions about the Canadian economy’s growth trajectory, its capacity to absorb labour supply, and the policy levers that will guide its path through 2025. A central theme in the analysis is the rate at which new workers can be placed into productive employment and how wage dynamics interact with inflation expectations to shape the BoC’s policy stance.
The demographic backdrop—particularly the pace of immigration—has a direct bearing on the labour market’s long-run supply side. The December population increase of 67,000 highlights a trend where immigration policy and the demand for skilled workers are converging with labour-market realities. While robust immigration has historically supported growth in Canada, the ability of the economy to integrate newcomers into productive employment remains a critical question. Changes in policy or administrative processing times can influence the speed at which new entrants participate in the labour market, potentially affecting both the unemployment rate and wage dynamics.
The combination of public-sector hiring and a more modest private-sector contribution raises questions about private-sector confidence and investment. If firms remain cautious about hiring, even in the face of a strong job-creation month, the economy could face headwinds in sustaining momentum. The December data, with its strong public-sector contribution, invites policymakers to consider the role of fiscal policy as a driver of near-term activity while simultaneously ensuring that private-sector confidence and investment are nurtured to sustain growth in the medium term.
A further dimension is the risk of external shocks, including potential tariff changes in the United States and shifts in global bond markets. The sectoral composition of job growth matters for resilience. A labour market that relies heavily on public-sector hiring may be more resilient to cyclical fluctuations in private demand in the short term, but it can also be more sensitive to fiscal policy shifts and political dynamics. The December data thus underscores the importance of a balanced growth strategy that combines prudent monetary policy with supportive fiscal measures to anchor demand and maintain employment opportunities, especially for workers who are most vulnerable to cyclical downturns.
From an inflation perspective, the moderation in wage growth provides room for the BoC to pursue a slower pace of rate cuts, aligned with a broader objective of stabilizing inflation around the two percent target. The path toward lower rates remains conditional on a continuing easing in wage pressures, stable or improving productivity, and a sustainable expansion in employment across both private and public sectors. Policymakers will also monitor global inflation dynamics and the trajectory of energy prices, which can influence domestic price growth even when labour-market slack helps to keep wage gains in check.
In this broader context, the December figures reinforce the view that Canada’s economy is navigating a transitional period in which strong headline hiring coexists with a nuanced underlying story. The Bank of Canada’s policy framework—primarily anchored to inflation outcomes and the degree of slack in the economy—will need to account for these complex dynamics. As the year progresses, the central bank’s decisions will likely reflect a careful weighing of the positive momentum in employment against the risk that private-sector hiring remains uneven and wage growth stays muted enough to prevent a revival of inflationary pressures.
Analysts consistently highlight that the December outcome is not a stand-alone indicator of a sustained trend. Rather, it is a data point in a dynamic process that includes immigration policy, private-sector investment, wage formation, and external risk factors. The Bank of Canada’s communications and its policy guidance will continue to emphasize the importance of data-dependency, with the understanding that even a single month’s strength can influence expectations, while broader, multi-month patterns will ultimately determine the cadence and magnitude of rate adjustments.
External Risks, Tariffs, and the Global Growth Backdrop
The December job surge occurs within a broader global and policy context that could affect Canada’s near- and medium-term growth trajectory. Several external risks and policy developments warrant close attention, not only for their immediate macroeconomic implications but also for their capacity to influence consumer behaviour, business investment, and the labour market’s ability to absorb entrants.
Tariffs and trade policy emerge as a salient external risk in the discourse surrounding Canada’s growth outlook. Analysts highlight that tariff threats and protectionist measures can dampen business confidence, alter supply chains, and influence hiring plans across sectors. The potential impact on Canadian firms’ cost structures and pricing strategies can feed into inflation dynamics, complicating the central bank’s task of maintaining price stability while supporting economic growth. In this environment, even if domestic labour markets show strength, external policy shocks can reposition the risk-reward calculus that firms use when deciding to hire, invest, or adjust wages.
The December labour-market data also interact with global bond-market dynamics. Rising global yields can tighten domestic financial conditions, affecting borrowing costs for households and businesses. Higher financing costs can slow private investment and hiring, offsetting some of the domestic productivity gains and offsetting the marginal gains from strong payroll numbers. The interplay between domestic wage growth, unemployment dynamics, and global financial conditions makes the BoC’s decision framework more complex, requiring a careful assessment of the external environment in addition to domestic data.
Inflation remains a central variable in this calculus. The moderation in wage growth observed in December provides part of the answer to the inflation puzzle: it reduces pressure on price settings, allowing the BoC to consider a more accommodative stance without risking an acceleration in inflation. Yet policymakers also must consider that wage growth can re-accelerate if demand strengthens or if labour-market tightness intensifies in other parts of the economy. The December data contribute to a nuanced expectation that inflation could remain near target for an extended period, which supports gradual, data-driven easing rather than abrupt shifts in policy.
Additionally, labour-market slack and the public-private sector balance—highlighted by December’s substantial public-sector contribution—underscore the risk that a domestic growth story could be skewed by policy-driven hiring dynamics rather than by a broad-based private-sector expansion. This distinction matters because a durable recovery requires private-sector confidence and investment, not simply a temporary expansion in government employment. The December numbers thus reinforce the importance of monitoring both policy-driven employment changes and private-sector hiring trends to gauge the economy’s true momentum.
Ultimately, the global growth backdrop—including the trajectory of major economies, commodity prices, and currency movements—will continue to shape Canada’s growth prospects, the labour market’s absorption capacity, and the BoC’s policy choices. The December data add to a body of evidence that suggests measured, data-driven policy adjustments are appropriate as Canada navigates a period of potential headwinds and opportunities. As the year unfolds, a careful balance between supporting growth and maintaining inflation discipline will remain central to the Bank of Canada’s approach.
Market Outlook and Policy Path: What the Street Expect from the BoC
With December’s labour-market data in hand, analysts have laid out a spectrum of possible paths for the Bank of Canada’s policy stance in the near term. The central questions center on whether the BoC will begin cutting rates promptly, how quickly it will move, and what the ultimate level of policy interest rates will be to sustain growth while keeping inflation anchored near target.
A common thread in many analyses is the view that the December outturn gives the BoC room to adopt a gradual easing cycle, starting with a rate cut in January and followed by a pause in the near term. The logic behind this stance rests on several pillars: the inflation environment has shown signs of cooling, wage growth is moderating, and the labour market retains some slack that can accommodate softer policy settings without derailing employment gains. The presence of public-sector hiring and the mixed private-sector signals imply that policy needs to be cautious, avoiding an overreaction to a single monthly blip while still providing support to a fragile growth impulse.
Desjardins’ Royce Mendes is explicit about a scenario in which a January rate cut is followed by a pause in March. Mendes argues that the stronger-than-expected labour numbers, paired with a deceleration in wage growth, give the BoC confidence that a modest easing trajectory can be pursued without jeopardizing price stability. He also notes that policy rates could eventually be reduced toward the two percent target, though he emphasizes the role of external risks, including tariff dynamics and global bond markets, in shaping the pace and extent of cuts.
Capital Economics’ Bradley Saunders frames the December data as a mixed signal, acknowledging the robust 91,000 gain but highlighting that much of the strength came from the public sector. This raises questions about the durability of the momentum in the private sector, a key driver of medium-term growth. Saunders suggests that the BoC could still contemplate a January cut, but the data call for caution and a flexible approach that can adapt to developments in private-sector hiring, the unemployment trajectory, and wage dynamics.
Oxford Economics’ Michael Davenport takes a more cautious lens on the immediate reaction to December’s numbers, warning that overreacting to one month can be misleading given existing slack in the labour market. Davenport’s scenario anticipates that unemployment may move higher again in early 2025, around seven percent, even as signs of wage growth cooling persist. In his view, the BoC should stay on a track toward gradual easing, with an emphasis on watching how the economy evolves across sectors and how inflation behaves as new data become available.
RBC’s Nathan Janzen offers a more conservative interpretation of the December results, citing the volatility inherent in monthly unemployment rates and the likelihood that the unemployment rate will resume its upward trend. He suggests that the BoC may slow its pace of rate cuts to 25 basis points in response to ongoing inflation near the target and the need to maintain credibility in keeping inflation expectations well anchored. Janzen’s view underscores a careful calibration of policy that avoids premature easing while still leaving room to support the economy if the data continue to show weakness in private-sector demand.
National Bank of Canada’s Kyle Dahms and Matthieu Arseneau focus on the growth risks that lie ahead, pointing out that the job gains’ reliance on public-sector hiring reduces the signal about private-sector momentum. They emphasize the potential for tariffs to weigh on the economy at a time when inventories are elevated, which could necessitate more accommodative policy measures to maintain growth above potential. They argue that the neutral rate range could need to be revisited by mid-year if the data confirm a trend of slower-than-expected private-sector hiring and persistent slack.
Across these viewpoints, a convergence emerges around a data-driven, incremental approach to monetary policy. The December labour-market strength does not compel an aggressive tightening nor does it necessarily require an abrupt pivot to a highly accommodative stance. Instead, the consensus leans toward a measured December-to-January policy action, with the possibility of a pause to gauge the persistence of the momentum and the trajectory of wage growth and inflation. The Bank of Canada’s communications will be critical in guiding market expectations, particularly how it frames the balance between supporting growth and maintaining price stability amid evolving external risks.
The broader market implication is that expectations for the BoC’s policy path will be sensitive to the evolving macro picture. If private-sector hiring accelerates in subsequent months and wage growth remains contained, the odds of additional rate cuts could rise, helping to push the policy rate toward the lower end of the neutral range. Conversely, if inflation risks re-emerge or if external shocks intensify, the BoC could adopt a more cautious approach, delaying further easing to ensure that inflation remains on track to converge to target. As such, investors and policymakers alike will be paying close attention to upcoming data releases, including the next employment report, wage growth figures, and broader indicators of domestic demand and inflation expectations.
The Growth Trajectory and Policy Dacing: Navigating a New Year
Taken together, the December 2024 labour-market numbers paint a complex but informative portrait of Canada’s economic posture as 2025 begins. The 91,000-job gain confirms that the economy was able to sustain a meaningful expansion across the downturn-to-recovery cycle, but the composition of those gains—significant public-sector hiring alongside a mixed private-sector contribution—adds nuance to how the momentum might unfold in the months ahead. In this context, the Bank of Canada’s policy response is likely to be guided by a careful assessment of both the depth of slack in the economy and the trajectory of inflation, with a bias toward gradualism and data dependency.
For workers and households, the December numbers offer a mixed set of implications. On the one hand, stronger employment signs and a cooling in wage growth can support household incomes and purchasing power, potentially stabilizing consumption. On the other hand, the reliance on public-sector jobs and the uncertain path for private hiring suggest that job security and wage growth could remain uneven across sectors. For businesses, the data underscore the importance of maintaining flexibility in hiring strategies, balancing the need to fill roles with the realities of domestic demand and external policy pressures.
From a policy perspective, the December data bolster the case for a cautious, gradual easing approach that aims to support the economy without compromising price stability. The potential for a January rate cut, followed by a pause and careful monitoring of further data, remains a widely discussed path among analysts. Yet the exact cadence will depend on how the labour market evolves, how inflation behaves, and how external risks such as tariff policy and global financial conditions interact with domestic demand.
In the months ahead, the Bank of Canada will likely emphasize the importance of data-driven decision-making, with a focus on the growth of private-sector employment, wage dynamics, and the unemployment trajectory. The December release has underscored that while the labour market is capable of delivering strength, its broader health will depend on sustaining private-sector momentum, integrating new workers into meaningful employment, and maintaining price stability in a world of evolving external risks. The path forward will require careful balancing of growth support with the discipline needed to prevent inflation from reigniting.
Conclusion
Canada’s December 2024 labour-market performance delivered a robust headline: a 91,000-job gain and a 6.7% unemployment rate, surpassing expectations and intensifying discussions around the Bank of Canada’s next move. The data reveal a labour market that is strong in aggregate yet nuanced in its composition. A substantial portion of December’s gains came from the public sector, while private-sector momentum showed mixed signals across industries such as education, transportation, and warehousing. Hours worked rose, and wage growth cooled, painting a picture that supports a measured, data-driven policy path rather than a rapid or aggressive shift in monetary accommodations.
Analysts offered a spectrum of interpretations on the policy implications. Some see a strong case for a January rate cut with a brief pause in March, while others caution that private-sector momentum remains fragile and that wage dynamics still need careful monitoring. The December data, together with ongoing concerns about inflation, tariff-driven uncertainty, and external financial conditions, suggest that the BoC is likely to proceed with caution, tailoring its policy stance to how the economy evolves over the next several months.
Looking ahead, the central bank’s decisions will hinge on the persistence of private-sector hiring, wage trends, and the unemployment rate trajectory, all within the broader context of immigration dynamics and external risk factors. As Canada navigates 2025, the balance between supporting growth and maintaining price stability will define the policy path, with the December labour-market outturn serving as a crucial data point in this ongoing assessment. The economy’s resilience is evident, but the precise pace and composition of growth will continue to depend on how domestic demand, labour supply, and international conditions interact in the months to come.