The latest data from Statistics Canada revealed a mixed scenario for the Canadian job market in January. Despite a loss of 25,000 jobs, the unemployment rate dropped to 6.5%, reaching its lowest point since September 2024. The decline in the jobless rate was attributed to a decrease in the number of individuals actively seeking employment.
The labor force participation rate also decreased to 65%, while there was a notable increase in the number of individuals not in employment or job hunting during January. The manufacturing sector experienced the most substantial job losses, continuing to face challenges from U.S. tariffs. Additionally, employment in educational services and public administration sectors declined during the period.
Economists are divided on interpreting the data, with Douglas Porter, BMO’s chief economist, highlighting both positive and negative aspects. He noted that the employment report reflects an economy adjusting to significant changes, including the impact of U.S. tariffs, a slowdown in population growth, and an aging population.
Despite the decrease in part-time employment by 1.8%, there was a slight uptick in full-time positions. Private-sector employment saw a decline of 52,000 jobs, offsetting previous gains from the end of 2025. On the contrary, the public sector witnessed minimal changes in employment figures.
Certain sectors saw job gains, including information, culture, and recreation, as well as agriculture and utilities. Ontario experienced the most significant job losses, shedding 67,000 positions, primarily in manufacturing. In contrast, Alberta, Saskatchewan, and Newfoundland and Labrador saw job gains during the period.
Average hourly wages increased by 3.3% to $37.17 compared to the previous year. Andrew Grantham, senior economist at CIBC Capital Markets, described the employment report as a mixed bag, suggesting it may not significantly impact the Bank of Canada’s interest rate decisions for the rest of the year.
