It is unbearably cold outside, but there is nothing frigid about the Canadian labour market. It hasn’t been this hot in more than 40 years, which could lead to interest rate hikes at the Bank of Canada.

Statistics Canada reported Friday that the national unemployment rate fell to 5.7 per cent in December — the lowest level since 1976. The Canadian economy added 78,600 net new jobs, including 23,700 full-time jobs — much more than the 40,000 forecast.

Overall, 2017 was a phenomenal year for Canadian employment with the creation of 422,500 jobs, most full-time, which made it the best year for the labour market since 2002. By industry, factories saw an employment increase of 3.5 per cent in 2017, while the services sector experienced a boost of two per cent. The labour force participation rate stands at 65.8 per cent.

Men had a higher unemployment rate then women — 5.2 per cent versus 4.8 per cent. It continues to be a tough job market for younger Canadians, with the unemployment rate for those aged 15-24 at 10.3 per cent.

The surging jobs may set the stage for higher interest rates at the central bank.

“The Bank of Canada has what it needs to hike again, maybe two or three times in 2018,” Frances Donald, a senior economist at Manulife, told 680 NEWS business editor Richard Southern on Friday.

“I’m not sure they will be willing to move ahead with another rate hike on Jan. 17, but it will probably give them the confidence to tee up another rate hike in March or April.”

In a note to clients, CIBC economists say that they are expecting an interest rate increase at the central bank’s next meeting on Jan. 17.

The higher rates could put further pressure on an already softening housing market.

The Canadian dollar rose 0.75 to 80.80 cents U.S. as investors expected action from the Bank of Canada.