The Canadian economy beat expectations to

add 54,000 jobs

in November, driving the

unemployment rate

down to 6.5 per cent from 6.9 per cent a month earlier.

It was the second consecutive monthly decline in the jobless rate, which peaked at 7.1 per cent in September, the highest it has been outside the pandemic since May 2016.

The growth in employment was driven by a rise in part-time work,

Statistics Canada said on Friday

. The economy has added 181,000 jobs in the last three months, after employment growth was flat from January to August of this year.

Economists had been expecting the economy to lose jobs last month.

Healthcare and social assistance led the way with 46,000 jobs added during the month, while accommodation and food services gained 14,000 jobs and natural resources 11,000.

Economists had been expecting the economy to lose jobs last month and Friday’s data has convinced them that Bank of Canada will hold interest rates on Dec. 10.

The central bank’s policy rate currently sits at 2.25 per cent, the lower bound of its neutral range.

“The takeaway has to be that the Canadian labour market is in better shape than most had thought,” said Toronto-Dominion Bank chief economist Andrew Hencic, in a note.

However, he added that the situation can’t be characterized as “good” and there is still slack in the job market, with trade headwinds expected to continue into next year.

The Bank of Canada signalled in October that it may be done with its easing cycle, if the economy operates in line with its forecast.

Gross domestic product also beat the central bank’s expectations in the third quarter, with the economy expanding at annual pace of 2.6 per cent, above the bank’s forecast of 0.5 per cent.

That result may be revised though because September trade data was not available due to the U.S. government shutdown.

Meanwhile, manufacturing and wholesale and retail trade, sectors that are sensitive to trade, lost jobs in November. The layoff rate, that is the proportion of people who were employed in October and had become unemployed in November, was 0.7 per cent, virtually unchanged from a year ago at 0.8 per cent.

Growth in part-time work has outpaced full-time work over the past three months, with the former increasing by 103,000 jobs while the latter has increased by 78,000 since September. The number of private sector employees rose by 52,000 last month, while public sector and self-employed workers were little changed.

David Rosenberg, founder and president of Rosenberg Research & Associates Inc., said the surge in part-time work should not distract from the challenges facing the full-time job market.

“Full-time employment is down to a three-month low, while the number of part-time workers hit the highest level on record,” he said, in a note. “Nearly one-in-five Canadians are now working part-time.”

The total number of people in the labour force declined by 26,000 in November and the participation rate fell by 0.2 percentage points to 65.1 per cent.

“We don’t think the strong pace of hiring in recent months will be sustained and expect layoffs will build in the near term as trade policy uncertainty and U.S. tariffs weigh on firms amid weak domestic demand,” said Oxford Economics economists Tony Stillo and Michael Davenport, in a note to clients.

“However, a shrinking population will limit the rise in the unemployment rate.”

The youth unemployment rate fell to 12.8 per cent in November, after it peaked at 14.7 per cent in September.

Average hourly wages among employees increased by 3.6 per cent on a year-over-year basis last month, up from 3.5 per cent in October.

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• Email: jgowling@postmedia.com