The first significant economic report of the new year landed on Friday and it is raising speculation about the Bank of Canada’s next rate move.

Statistics Canada’s December employment numbers show nearly 91,000 new jobs were added for the month, nearly four times more than had been expected.  Most of the jobs (56,000) are full time as the First National reports.

The hiring boom dropped the unemployment rate to 6.7%, down from 6.8% in November.  The employment rate, which is the percentage of the population that is working, actually increased for the first time in two years.

The news is broadly seen as good, showing the Canadian economy is resilient and doing well as we continue to climb down from high inflation and other lingering effects of the pandemic.

Some market watchers are now suggesting the Bank of Canada may not need to make another rate cut at its next setting on January 29th.  They also point to the weak Canadian dollar, and signs that the U.S. central bank will slow its rate cutting plans, as indicators the BoC will pause.

However, a number of prominent Canadian economists point out that StatsCan’s employment numbers have a history of volatility, which make it difficult to base forecasts on a single report.  They also say the lingering threat of U.S. tariffs is weighing on business and consumer confidence, and lower interest rates could help counter that.

With the arrival of the new year comes a new round of predictions about what is ahead for interest rates, mortgages and real estate.

Generally, the mood among realtors is up-beat as First National report mentions. The Canadian Real Estate Association has tempered its forecasts but continues to forecast increases for sales and home prices through 2025.  CREA expects an active spring market.  It is predicting a 6.6% increase in sales, with nearly half-a-million properties changing hands this year, and a 4.4% increase in the national average price of a home, to $713,000.

Canada’s big realtors see a stabilizing but improving market ahead.

Royal LePage is calling for its aggregate home price to rise 6.0%, year-over-year, to nearly $857,000 by the end of 2025.

Re/Max is looking forward to a 25% increase in sales with a 5.0%, year-over-year, increase in pricing.

Falling interest rates get most of the credit for fueling a market resurgence.  Five consecutive cuts by the Bank of Canada, starting back in June, dropped the trend-setting policy rate from 5.0% to 3.25%.  But the Bank has signalled more cuts are coming and that might have some buyers holding back and waiting for even cheaper financing costs.

The lower rates do not offer the same benefits for homeowners who are renewing their mortgages.  Even with the central bank’s cuts they are still facing significant increases over the rock bottom rates they had.