By Julie Gordon and David Ljunggren
OTTAWA (Reuters) -The Canadian economy added twice as many jobs as expected in December and the unemployment rate hit a 22-month low, though analysts see a grim January amid fresh restrictions to slow the fast-spreading Omicron variant of COVID-19.
Canada added a net 54,700 positions, beating analysts' expectations of a gain of 27,500, while the jobless rate dipped to 5.9% from 6.0% in November, Statistics Canada said on Friday.
This was the lowest level since the 5.7% reported for February 2020, just before COVID-19 emerged. But the latest survey was completed in early December, before what Statscan called the "widespread emergence" of Omicron.
Several provinces have since clamped down, which could weigh on January's numbers, analysts said.
"We're still waiting for the other shoe to drop ... this is not capturing Omicron sensitivities one bit," said Derek Holt, head of capital markets economics at Scotiabank.
Holt noted the restrictions in Ontario and Quebec, the two most populous Canadian provinces, and also said unvaccinated workers were being laid off under vaccine mandates.
Toronto, the country's most populous city, said this week it had fired 461 workers for not complying with a mandatory inoculation policy. The latest data from Canada's federal civil service shows 775 people are unvaccinated and more than 3,000 have requested exemptions.
Still, economists say the overall employment trend is strong.
"To me it doesn't change the big picture, which has been a very robust job market, a very strong recovery," said Jimmy Jean, chief economist at Desjardins Group, noting that full-time jobs increased by 122,500, accounting for the entire net gain.
This was partially offset by the loss of 67,700 part-time jobs. The economy added 10,600 service-sector jobs and 44,200 jobs in the goods-producing sector. Canadian employment is now 240,500 jobs above pre-pandemic levels.
The Bank of Canada https://www.reuters.com/markets/us/bank-canada-says-likely-cut-rates-effective-lower-bound-more-often-2021-12-15 said last month that labor market slack had been absorbed to a significant degree, signaling a first interest rate hike could come soon. Money markets expect the central bank to start raising rates in March. [BOCWATCH]
"I think it does increase the pressure on the Bank of Canada to move more quickly, just incrementally," said Andrew Kelvin, chief Canada strategist at TD Securities.
The Canadian dollar strengthened 0.3% to C$1.2694 per greenback, or 78.78 U.S. cents.
(Additional reporting by Steve Scherer in Ottawa and Fergal Smith in Toronto;Editing by Catherine Evans, Jonathan Oatis and Paul Simao)