CIBC Still Sees Bank of Canada on Hold This Year Despite Labor Market Signaling "Plenty" of Slack

08:54 AM EST, 01/09/2026 (MT Newswires) -- The Canadian labor market continued to add jobs in December, although not enough to keep pace with the rate of labor force growth during the month, said CIBC after Friday's release of the Labour Force Survey (LFS).

Employment rose by 8,000 in December, which was better than the consensus expectation for a marginal decline, noted the bank.

However, a three-tick improvement in participation rate during the month meant that the unemployment rate still increased to 6.8%, which was actually slightly higher than expected by the consensus, pointed out CIBC.

The employment-to-population ratios held steady on aggregate and for prime-aged (25-54) workers. The composition of job growth was better than in the prior month, as full-time work (+50,000) offset a decline in part-time.

By sector, health care once again led the way, offsetting declines in areas such as accommodation & food services and professional services. Wage growth for permanent employees eased to 3.7%, from 4.0% in the prior month and a tick below consensus forecasts, stated the bank.

Overall, Friay's data demonstrate that the sharp move lower in unemployment during the preceding three months was partly flattered by a decline in labor force participation, according to the bank.

With more people once again looking for work, Friday's unemployment rate suggests that "plenty" of slack remains in the labor market. CIBC continues to expect no change in the Bank of Canada's overnight rate through 2026.

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