December’s numbers came in better than expectations, with the unemployment rate falling m/m from 6.9% to 6.7%.

We’re cautious to get excited about it though, as numbers remain elevated on a y/y basis and currently sit at the 2^nd highest level since September 2021.

The yearly jump in unemployment is broad-based, but led specifically by key markets like Ontario and Quebec.

The core-aged (25-54) demographic saw monthly declines in unemployment, though the y/y/ picture tells a different story.

Results look okay for the older (55+) demographic as well, with the largest monthly decline of the group and only modest y/y growth.

The picture for young job seekers is more challenged, with unemployment growing m/m and up significantly y/y, driving a 14% unemployment rate.

Monthly improvements could be short-lived

While at face value the print looks strong, some of the underlying data remains worrisome. Case in point, unemployment duration has risen to just under 25 weeks, near COVID-induced highs in 2021.

The gradual increase in the share of long-duration unemployment (>27 weeks) indicates something structural, rather than a shock event.

We’ve been following job vacancy rates, which continue their march lower, another headwind for job seekers.

The current backdrop suggests unemployment at current levels could be entrenched. We’ll be watching the participation rate closely, which could continue to weaken the longer the average stretch of unemployment lasts for Canadians.