Canada adds 8.2k jobs in December

Canadian Economic Outlook: December 2023 & Forecast for 2026

Key Concepts:

• Employment Data: Analysis of job gains/losses, full-time vs. part-time employment, and demographic shifts in employment.
• Economic Resilience: Canada’s ability to withstand various economic headwinds (tariffs, geopolitical events, etc.).
• Kuzma (Buy America Act): Potential impact of the US “Buy America” policy and related Supreme Court decisions on Canadian trade.
• Diversification: Shifting away from reliance on US trade towards new partnerships and domestic economic drivers.
• Headwinds & Tailwinds: Factors negatively (headwinds) and positively (tailwinds) impacting the Canadian economy.
• Capital Investment: Increased investment in sectors beyond real estate, like infrastructure, energy, and defense.

1. December 2023 Employment Numbers & Data Validation

The Canadian economy added 8,800 jobs in December, exceeding economist expectations. The unemployment rate increased, while full-time employment rose by 50,000 and part-time employment decreased by 42,000. Travis Oroki, President of Hayes, expressed skepticism regarding the previous month’s data (a reported 50,000 job increase bringing unemployment down to 6.5%), stating that a jump from 6.9% to 6.5% with such a large job addition “did not make sense.” He believes the current 6.7% unemployment rate is a more accurate reflection of the situation, suggesting potential data correction issues in the prior reporting period – possibly stemming from errors in data collection or summer corrections.

2. Positive Indicators in December’s Data

Oroki highlighted several positive aspects of the December employment report. He noted a positive trend in construction employment, albeit marginal. The significant increase in full-time jobs (50,000) compared to the decrease in part-time positions was particularly encouraging, given December’s reliance on temporary holiday employment for students and part-time workers. He stated, “To see 50,000 full-time jobs, we love that.”

3. Drivers of Job Creation & Demographic Shifts

The largest driver of job creation was identified as healthcare and social services. A surprising data point was the substantial increase in employment among individuals aged 55 plus (33,000 jobs). While acknowledging that increases in healthcare and social services often correlate with public administration jobs (and therefore government spending), Oroki expressed optimism, stating, “It’s not that GDP driving that we’re looking for, but I’m okay with it.”

4. 2026 Economic Outlook: Resilience & Optimism

Oroki forecasts a strong economic year for Canada in 2026. Hayes’ annual employer survey indicates that over half of employers plan to increase headcount. He emphasized Canada’s demonstrated economic resilience throughout 2025, despite facing numerous challenges including an election, government changes, tariffs, and international conflicts (including the situation in Venezuela and the war in Ukraine). Despite these “headwinds,” the Canadian economy remained relatively flat, with the unemployment rate moving from 6.8% to 6.7%.

He believes several factors will contribute to this positive outlook, including infrastructure investment, mining, and energy sector growth, particularly in Western Canada. He noted the potential for increased urgency in energy projects due to the situation in Venezuela.

5. The Kuzma/Buy America Act & Trade Diversification

The potential impact of the US “Buy America” policy (Kuzma) was discussed. Oroki suggested that Canada needs to prepare for a scenario where Kuzma remains in effect, potentially in a modified form. He emphasized the need for Canada to diversify its trading partners and strengthen domestic trade between provinces, reducing reliance on the US market. He stated, “And part of why Canada needs to work really really hard…is we can no longer rely on the Americans. And I think that’s exciting to a lot of corporations looking to diversify who our partners are.” He anticipates a significant shift in the economic landscape over the next decade.

6. Increased Confidence & Capital Investment

Oroki believes that Canadian companies are gaining confidence after navigating the challenges of 2025. He observed a renewed sense of collaboration between government, the public sector, and private businesses, all moving in the same direction. This is driving capital investment into sectors beyond real estate, including infrastructure, energy, and defense. He expressed pride in being Canadian and predicted a year of economic success in 2026.

7. Potential Headwinds & Surprises

Geopolitical events, such as the situation in Venezuela, were identified as potential headwinds. The outcome of the Kuzma situation remains a significant uncertainty. However, Oroki highlighted several potential positive surprises, including:

• Entrepreneurial Spirit: A thriving tech startup scene attracting investment.
• Immigration Policies: US immigration policies potentially attracting skilled workers to Canada.
• Housing Market: Significant capital waiting to enter the housing market.
• Rare Earths: Canada’s strong position in the global rare earths market.

8. Notable Quote:

“I think we have shown to be a very resilient economy…I’m really, really excited about employment in 2026.” – Travis Oroki, President of Hayes.

9. Data & Statistics:

• Job Creation (December): +8,800 jobs
• Unemployment Rate (December): 6.7%
• Full-Time Job Increase: +50,000
• Part-Time Job Decrease: -42,000
• Employment Increase (55+ Age Group): +33,000
• Employer Headcount Increase (Hayes Survey): >50% of employers planning to increase headcount.
• Unemployment Rate (January 2025): 6.8%

Conclusion:

The Canadian economy demonstrated resilience in 2025, and the December employment data, despite some initial skepticism, points towards a positive trajectory. The forecast for 2026 is optimistic, driven by increased capital investment, diversification of trade, and a collaborative spirit across sectors. While potential headwinds like geopolitical instability and the Kuzma policy remain, Canada is well-positioned to capitalize on emerging opportunities in infrastructure, energy, and technology, leading to a potentially prosperous economic year.