Canada’s Jobless Rate Drops to 16-Month Low at 6.5%

Labour Market Shows Sharp Improvement

Canada’s unemployment rate fell to 6.5% in November, reaching its lowest level since mid-2024, according to new figures released by Statistics Canada on Friday. The decline marks a notable turnaround after months of rising joblessness and signals a tightening labour market heading into year-end.

Recent Decline Signals Reversal of Trend

The latest rate is down from 6.9% in October and well below the 7.1% peak recorded in September, a level not seen since 2016 outside the pandemic period. Analysts say such a steep two-month decline is rare, with BMO chief economist Douglas Porter noting that similar momentum was last seen during the tech boom of 1999.

Population Slowdown Reduces Labour Pressure

Economists attribute part of the improvement to a cooling in population growth, which has eased pressure on the labour force. Statistics Canada reported a slight dip in labour-force participation in November, contributing to the drop in overall unemployment.

Employment Gains Concentrated in Part-Time Work

The economy added 54,000 jobs in November, the third consecutive monthly increase, though the majority were part-time positions. The private sector accounted for most of the growth, with young Canadians aged 15 to 24 seeing the strongest employment gains after facing a tough job market earlier in the year. Their unemployment rate fell to 12.8%, still high but an improvement.

Key Sectors Drive Growth, While Retail Declines

Job creation was led by health care and social assistance, accommodation and food services, and natural resources. However, wholesale and retail trade lost jobs, reversing gains reported in October. Across the provinces, Alberta saw the largest increase, adding 29,000 positions, followed by smaller gains in Manitoba and New Brunswick.

Wage Growth Slows but Remains Positive

Average hourly wages rose 3.6% year-over-year, up $1.27 to $37.00, marking steady but moderate wage growth compared with earlier months. Analysts note that wage trends continue to play a central role in inflation and monetary policy assessments.

Rate Cut Unlikely as Economic Data Strengthens

The stronger-than-expected labour report adds to recent upside surprises in GDP and inflation, weakening the case for a Bank of Canada interest-rate cut at its announcement next Wednesday. Economists at BMO and RBC say the data likely cements the central bank’s view that conditions do not warrant a reduction, and some predict no cuts through 2026.

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