Employment increased the most since January 2023, Statistics Canada reported Friday from Ottawa. **CREDIT: Sol/Unsplash**

Employers added 91,000 jobs in December and the jobless rate fell a tenth of a percentage point in a report that was broadly better than economists had predicted, suggesting the Bank of Canada may temper its pace of easing.

It was the biggest increase in employment since January 2023, Statistics Canada said Friday from Ottawa. The jobless rate declined to 6.7%, from 6.8% in November. Full time employment increased by 57,500, the fourth straight gain, and hours worked increased 0.5% on the month.

Economists had expected a 25,000-position increase in employment and a slight uptick in joblessness to 6.9%, according to median forecasts.

“Overall, today's report was clearly better than anticipated and, if mirrored by other data, could signal a slower pace of interest rate cuts ahead than we were previously anticipating,” CIBC’s Andrew Grantham wrote in a research note. “However, with rates still above the mid-point of the neutral range, unemployment elevated relative to a year ago, and huge uncertainty emanating from the threat of U.S. tariffs, we continue to forecast a 25 basis point reduction at the January meeting and a 2.25% trough for the overnight rate later this year.”

While the unemployment rate came down in December, it has increased by a full percentage point in the past 12 months—it was 5.7% in January 2024, after falling to as low as 4.8% in the middle of 2022.

The central bank’s neutral range—where monetary policy is neither stimulating nor restricting economic growth—is between 2.25% and 3.35%, according to the bank’s latest quarterly report. Since June, policymakers have cut interest rates 175 basis points to 3.25%. They meet again on Jan. 29 to decide the cost of borrowing, with traders predicting another 25 basis point cut.

Not everyone believes another rate cut is in the bag.

“The solid job gains will prompt some meaningful doubt on whether the Bank of Canada will cut again in January following the hyper aggressive 100 bps of cuts in Q4,” Doug Porter, chief economist at BMO Capital Markets Economics, wrote in a research note. “The fact that the Fed looks to move to the sidelines for a spell, and the Canadian dollar is struggling mightily may also chill the BoC for now.”