In January, Canada’s job market showed a mix of trends, with a loss of 25,000 jobs but a decrease in the unemployment rate to 6.5 percent, as reported by Statistics Canada. The drop in the unemployment rate, the lowest since September 2024, was attributed to fewer individuals actively seeking employment.
The labor force participation rate dipped to 65 percent, while the number of individuals not employed or searching for work increased year-over-year. The decline in jobs was primarily led by the manufacturing sector, which has been impacted by U.S. tariffs in recent months. Educational services and public administration also experienced a decrease in employment.
Douglas Porter, BMO’s chief economist, pointed out the dual nature of the situation, noting both negative aspects such as the job losses and positive elements like the reduction in the unemployment rate and increased hours worked. The economy is currently adjusting to challenges including U.S. tariffs, slowing population growth, and a rise in the elderly population.
Despite the decrease in employment, with part-time jobs seeing a notable decline, there was a slight uptick in full-time positions. Private-sector employment decreased by 52,000, offsetting gains from the previous quarter. However, public sector employment remained relatively stable.
Certain sectors saw job gains, including information, culture, and recreation, as well as business and support services. Notably, Ontario experienced a loss of 67,000 jobs, mainly in the manufacturing industry, while Alberta, Saskatchewan, and Newfoundland and Labrador saw job gains.
Average hourly wages rose by 3.3 percent compared to the previous year, reaching $37.17 per hour. Andrew Grantham, senior economist at CIBC Capital Markets, described the employment report as a mixed bag, indicating that it is unlikely to significantly impact the Bank of Canada’s interest rate policies for the remainder of the year.