MNI DATA IMPACT: Canada Nov Unemployment Rate Drops to 8.5%

Canada's unemployment rate unexpectedly declined in November on a mix of slower job growth and people leaving the labor force during the second coronavirus wave, government figures Friday showed.

The jobless rate fell to 8.5% from 8.9% in October, while economists predicted it would remain unchanged. The rate peaked at 13.7% in May and reached a modern-era low of 5.4% before the pandemic.

Payrolls climbed 62,100 versus economist predictions for 20,000. Still, the employment gain of 0.3% was much slower than October's 0.5% increase or average gains of 2.7% a month from May to September, Statistics Canada said.

Job growth has slowed after a burst of hiring following the spring lockdown, and now faces more pressures as rising Covid cases bring new health restrictions on trade and travel. Finance Minister Chrystia Freeland on Monday laid out a record CAD382 billion deficit for the fiscal year ending in March and another CAD100 billion of stimulus when the pandemic lifts, tying a return to fiscal "guardrails" to labor measures such as hours worked, unemployment and the employment rate.

Hours worked rose 1.2% in November, leaving them 5% lower in February before Covid-19 struck and lowered the total by 28%. The employment rate was little changed at 59.5% in November from October, and down 2.2 percentage points from a year ago.

Job gains may soften further as provincial governments toughen restrictions--yesterday Quebec moved to restrict most family holiday gatherings citing the rising Covid case load.

The labor force shrank by 19,500 in November, Statistics Canada said. One quarter of unemployed people now meet the definition of long-term joblessness, and almost half a million are working less than half their usual hours.