Canada's unemployment rate fell to 5.7% in January, the first drop since December 2022

Canada's unemployment rate fell to 5.7 percent last month, the first drop since December 2022, Statistics Canada said Friday.

The agency's labor force survey said the economy added 37,000 jobs in January after several months of relatively flat employment.

Quebec recorded a 0.2 percent drop in the unemployment rate to 4.5 percent in January, along with a 0.2 percent drop in the number of workers.

Between December 2023 and January 2024, the number of part-time workers in the province fell by 2.9 per cent per month. Full-time employment increased by 0.5 percent over the period.

Canada's labor market cooled significantly last year as higher interest rates weighed on consumer spending and business investment, pushing the unemployment rate up from 5.1 per cent in April to 5.8 per cent in December.

Employment rose in January across several sectors, including wholesale and retail trade, as well as finance, insurance, real estate, rental and leasing.

In addition, accommodation and food services showed the largest decline in employment.

Workers' wages continued to grow rapidly last month as Canadians sought compensation for past inflation. Average hourly wages, which have been growing steadily at an annual rate of four to five percent, rose 5.3 percent over the previous year.

Statistics Canada says wage growth has been stronger for women and higher earners. While men continued to earn more on average than women, women's average hourly wages rose 6.2 percent compared to men's 4.4 percent.

For workers in the top 25 percent of the wage distribution, their wages increased by 5.9 percent, while those in the bottom 25 percent increased by 4.6 percent.

Canada's labor market has been supported by strong population growth driven by permanent and temporary immigration.

Compared to last year, the economy was supplemented by 345 thousand jobs, the number of working population increased by one million people.

With the Bank of Canada holding its key interest rate at five percent, economists expect unemployment to rise throughout the year.