OTTAWA – Canada’s unemployment rate once again defied expectations in November, falling to a 16-month low of 6.5%. The drop signals a continued, robust recovery in the labour market, driven primarily by strong gains in part-time employment.
The economy added a net of 53,600 jobs in November, marking the third straight month of significant employment growth. Canada has now added 181,000 new jobs since September, contrasting sharply with the almost zero change seen in the first eight months of the year, a period characterized by trade uncertainty and U.S. tariffs.
Healthcare and Youth Drive the Gains
The drop in the jobless rate was primarily driven by a 63,000 net addition in the part-time workforce, with gains heavily concentrated in the healthcare and social assistance sector. Employment among youth (ages 15 to 24) also saw strong improvement, with the youth unemployment rate falling 1.3 percentage points to 12.8%.
Chief Economist with BMO Capital Markets, Doug Porter, noted the dramatic drop. “The real eye-popper in today’s report is the massive 4-tick drop in the jobless rate to 6.5%, following a 2-tick drop the prior month,” he said. This rapid two-month decline is comparable to the tight labour market conditions seen during the tech boom of 1999.
BoC Rate Hike Bets Increase
The strong labour market data has immediate implications for monetary policy. The average hourly wage growth of permanent employees remained steady at 4% in November, a key figure tracked by the Bank of Canada (BoC) for inflationary trends.
- Rate Decision: The data strongly cements the expectation that the BoC will leave its benchmark interest rate on hold at 2.25% at next week’s policy decision.
- Future Cuts Less Likely: Analysts note that the series of strong employment reports and the sudden pullback in the unemployment rate seriously reduces the odds of any further BoC rate cuts in 2026. Investors have begun to fully price in an interest rate hike in 2026, up from a 20% chance before the jobs data.
The economic optimism was reflected in the currency market, with the Canadian dollar strengthening by 0.7% against its U.S. counterpart, reaching its strongest level since September 24.
