Economic commentary provided by Alberta Central Chief Economist Charles St-Arnaud.
Bottom line
Employment increased more than expected for a second consecutive month, lowering the unemployment rate to 6.7%. Moreover, the rise in employment pushed the employment rate to its highest level since early 2023. Furthermore, the increase in hours worked suggests that economic activity in December was robust.
Wage growth for permanent workers decelerated to 3.8%, slightly below expectations and the slowest since April 2022. Moreover, we estimate that the 3-month annualized change of the seasonally-adjusted series was 1.1%, suggesting most of the deceleration is due to weaker wages in recent months. This suggests that wage growth should continue to slow in the coming months.
Overall, the report points to a tightening of the labour market. Nevertheless, it is important to note that the amount of slack remains important, with the unemployment rate close to 7% and the participation rate and employment rate close to their lowest level since the late 1990s.
The Bank of Canada will welcome today’s report as a sign that the Canadian economy could be improving. Nevertheless, it remains to be seen whether it will be sustained. As such, the sharp increase in uncertainty due to the threat of US tariffs will negatively affect business investment and the rest of the economy. We believe the BoC will cut its policy rate by 25bp at its January meeting to 3.00%, bringing rates closer to the mid-point of its estimate of neutral in an effort. This would also be an effort to counteract some of the headwinds of the increased uncertainty.
Alberta saw its strongest increase in employment since March 2021 in December at 35.2k and was responsible for about 40% of the job gains at the national level. Thanks to the strong increase in employment, the unemployment rate dropped to 6.7%, its lowest since March 2024. We also note that the employment rate edged higher, with job growth higher than population growth in December.
Over the past year, the province has created 100k jobs, about a quarter of the Canadian jobs, and the momentum has improved significantly in recent months. Moreover, with a sharp improvement in December, the unemployment rate in Alberta is now back to the national measure after being higher for some months.
However, wage growth in Alberta continued their underperformance relative to the rest of the country, despite improving to +2.5% y-o-y (see Where’s the boom? And the rise and fall of the Alberta Advantage for some explanations). Moreover, the momentum (3m/3m annualized change) suggests that wage growth has declined in recent months. As such, the average wage level in the province looks to have peaked during the summer and has declined since.
Employment increased by 90.9k in December, which was stronger than expected and the biggest monthly increase since January 2023. Employment rose by 413k in 2024, an increase of 2.0% y-o-y, a similar growth rate as in 2023. As a result of the higher employment, the unemployment rate decreased to 6.7% from 6.8%. The participation rate was unchanged at 65.1%. With the strong job gains, the employment rate, the share of the population holding a job, rose to 60.8% from 60.6%, its first increase since January 2023. Nevertheless, both the participation rate and the employment rate remain close to their lowest levels since the late 1990s.
Wage growth for permanent workers decelerated sharply to 3.7% from 3.9% y-o-y, slightly weaker than expectations. The 3-month annualized change in seasonally-adjusted wages also remained low at 1.1%, suggesting no major wage pressures in recent months.
The details show that the job gains were both in full-time (+57.5k) and part-time jobs (+57.5k). The higher employment in December was mostly in the public sector (+40.4k), but the gains in the private sector (+26.7k) and in self-employed (+23.7k) were also important. Over the past year, almost 40% of job creation was in the public sector. Hours worked increased in December (+0.5% m-o-m), suggesting that economic activity was likely robust on the month.
On an industrial level, the employment gains were mostly in the service sector (+68.4k), but there were also robust job gains in the goods-producing sector (+22.5k).
The details in the good-producing sector show that the job gains were mainly in manufacturing (+13.1k), utilities (+9.8k), and construction (+6.1k). Job losses in the natural resources sector (-7.4k) offset some of these gains.
The increase in the service industries (+68.4k) was relatively broad-based, led by education (+17.4k), transport and warehousing (+16.6k), finance, insurance and real estate (+15.9k), and health care (+15.5k). These increases were partly offset by a decline in professional, scientific and technical services (-11.2k) and public administration (-2.7k).
At a provincial level, all provinces saw an increase in employment with the exception of Manitoba (-7.2k, -1.0% m-o-m) and New Brunswick (-1.8k, -0.4% m-o-m). Most of the gains in employment were in Alberta (+35.2k, +1.4% m-o-m), Ontario (+23.4k, +0.3% m-o-m), Quebec (+14.4k, +0.3% m-o-m), BC (+14.1k, +0.5% m-o-m).
The unemployment rate was also mixed across provinces. It increased the most in New Brunswick (+0.9pp), PEI (+0.5pp), Manitoba (+0.4pp), and BC +0.3pp). It eased the most in Alberta (-0.8pp), Newfoundland (-0.4pp), Quebec (-0.3pp), and Ontario (-0.1pp).
The unemployment rate is the highest in Newfoundland (+10.4%), PEI (+8.5%), New Brunswick (7.8%), Ontario (+7.5%), and Alberta (+6.7%). It is the lowest in Quebec (5.6%), Saskatchewan (5.9%), BC (+6.0%), and Manitoba (6.2%).
Wages for permanent workers increased the most in Newfoundland (+8.1% y-o-y), Nova Scotia (+4.8% y-o-y), Ontario (+4.6% y-o-y), PEI (+3.9% y-o-y) and Saskatchewan (+3.9% y-o-y). It rose at the slowest pace in BC (+2.0% y-o-y), Alberta (+2.6% y-o-y), New Brunswick (+2.8% y-o-y), and Manitoba (+3.2% y-o-y).
In Alberta, employment rose by 35.2k and followed a 24.3k increase in November. With the strong job gains in December, the unemployment rate dropped to 6.7%, its lowest level since March 2024. The unemployment rate declined despite an increase in the participation rate to 69.5% from 69.3%. Similarly, the employment rate, the share of the population holding a job, increased to 64.8% from 64.1%, its highest level since April 2024. Wage growth for permanent workers rose slightly to 2.5% y-o-y. However, the 3m/3m annualized wage growth continued to decline -1.6 y-o-y%, the third month of negative momentum, suggesting very weak wage growth in recent months. The data shows that average wages for permanent workers peaked during the summer and have declined since then.
The job gains in Alberta were mainly full-time (+28.5k), while there was a loss in part-time (-4.2k). The higher employment was mainly in the self-employed (+18.0k) and the public sectors (+8.8k), while there were some losses in the private sector (-2.6k).
The employment gains were in both the service sector (+23.5k) and the goods-producing sector (+11.7k).
The increase in the goods-producing industry was mainly in construction (+11.1k) and manufacturing (+2.1k), while natural resources (-2.1k) saw a small decline.
The service sector saw relatively broad-based increases, led by accommodation and food services (+8.3k), other services (+7.7k), health care (+6.8k), and trade (+4.9k). The increase was partly offset by a decline in professional, technical and scientific services (-11.9k) and information, culture and recreation (-2.7k).
On a regional basis[1], the data is published on a three-month average basis (see table below). Over the past three months, the province gained 24.2k jobs each month on average. The increases were mainly in Calgary (+19.9k) and Edmonton (+10.9k), while there were small losses in Western Alberta (-2.4k), Red Deer (-1.6k), Wood Buffalo-Cold Lake (-0.9k), and Camrose-Drumheller (-0.7k).
The unemployment rate for the province eased to 6.6% on average over the past three months. The unemployment rate edged lower in many regions, led by Lethbridge-Medicine Hat (-0.8pp), Edmonton (-0.6pp), Western Alberta (-0.3pp), and Calgary (-0.1pp). However, it rose in Camrose-Drumheller (+0.8pp), Red Deer (+0.7pp), and Wood Buffalo-Cold Lake (+0.1pp).
The unemployment rate is the highest in Red Deer (7.6%), Calgary (+7.2%), and Edmonton (+6.8%). It is the lowest in Western Alberta (3.7%), Camrose-Drumheller (5.1%), and Lethbridge-Medicine Hat (5.4%).
The employment rate for Alberta rose to 64.4% over the past three months. The employment rate improved the most in Calgary (+1.2pp), Edmonton (+0.5pp), and Lethbridge-Medicine Hat (+0.1pp). It decreased the most in Western Alberta (-1.0pp), Wood Buffalo-Cold Lake (-1.0pp), and Red Deer (-0.9pp).