London area adds 1,700 jobs in January, unemployment rate falls to 5%

London’s economy began the year on the right foot, adding 1,700 jobs in January, mirroring the strong performance seen nationally, figures from the latest labor market snapshot show.

The job gains helped bring the unemployment rate for the London region that also includes St. Thomas, Strathroy and portions of Elgin and Middlesex County to five per cent last month, down from December’s 5.3 per cent, Statistics Canada said Friday.

January’s good showing comes after months of sluggish performance for the London market that had seen its unemployment rate rise steadily in the second half of 2022.

In total, 312,900 people were employed across the region last month.

London’s jobless rate matches the national rate after Canada blew past economists’ expectations and added 150,000 jobs in January.

A large portion of those gains was seen in Ontario, where 63,000 jobs were added, keeping its jobless rate virtually unchanged at 5.2 per cent.

It was the fifth straight month of increases for Canada’s labor market, with the country’s economy adding 326,000 jobs since September and pushing the number of employed Canadians to more than 20 million for the first time.

“The labor market is sending precisely zero signs of economic stress,” Bank of Montreal chief economist Doug Porter said in a report to investors.

That strong performance, however, is raising questions as to whether the Bank of Canada is really done raising interest rates.

At its last meeting, the central bank said it plans to hold rising interest rates after an aggressive campaign that saw the bank increase its key lending rate eight times since last spring.

But that stance was contingent on inflation coming down and signs of a more stable economy.

Friday’s figures suggest Canada’s labor market is still overperforming, some analysts said.

Strong jobs data increase the likelihood the Bank of Canada will be forced to deliver another quarter-percentage-point increase.

“We have to imagine that this sort of data surprise clears the high bar needed for additional tightening, but we still doubt the BoC will have enough evidence in hand to move rates in March,” Toronto-Dominion Bank strategist Andrew Kelvin and Robert Both said in a report to investors.

“So, we look to April, which at this point is definitely a live meeting, and we see maximum risk of rate hikes for June.”

With files from Bloomberg

[email protected]

Twitter.com/JuhaatLFPress

* * *

NOTE TO READERS: The London Free Press reported last month that the unemployment rate for the London region in January was 5.8 per cent. An internal review by Statistics Canada corrected that number to 5.3 per cent on Friday.