| Consensus | Consensus Range | Actual | Previous | |
| Employment - M/M | 5,000 | -10,000 to 22,000 | -24,800 | 8,200 |
| Unemployment Rate | 6.8% | 6.7% to 6.8% | 6.5% | 6.8% |
Highlights
The Canadian economy shed 24,800 jobs in January, a much weaker showing than the 5,000 employment gain expected by forecasters in an Econoday survey. Still, the unemployment rate dropped to 6.5 percent from 6.8 percent in December, the lowest since September 2024, as fewer people searched for work.
The participation rate decreased to 65.0 percent from 65.4 percent the previous month.
Average hourly wage growth slowed down to 3.3 percent year-over-year (unadjusted) from 3.4 percent in December.
The monthly employment decline was led by a 69,700 fall in part-time, while full-time positions were up 44,900.
Declines were concentrated in the private sector, which lost 52,000 positions, while the public sector added 13,300. Self-employment was up 14,000.
Looking at the sector breakdown,the services sector shed 21,000 jobs, led by declines of 24,200 in educational services, 11,200 in professional, scientific and technical services, 10,000 in public administration, and 7,500 in accommodation and food services. The largest gains were in information, culture and recreation (17,100), business, building and other support services (14,000), and health care and social assistance (8,400).
Goods-producing industries shed 3,800 jobs in January, as a 27,500 drop in manufacturing was only partially offset by gains in other major sectors: 10,500 in agriculture, 8,900 in construction, and 4,200 in utilities.
In January, 5.4 percent of permanent employees in industries dependent on
U.S. exports, like manufacturing, were planning to leave their jobs in the next 12 months, Statistics Canada reported. This is up 1.5 percentage points from a year earlier.
Looking ahead, the Bank of Canada is projecting slower population growth, driven by lower immigration, to affect labor force growth. Although businesses are cautious in their hiring, the slower labor force growth means the unemployment rate is unlikely to trend higher in the coming years. In fact, with modest economic growth, we should see some gradual improvement in the labor market in the coming years, BoC Governor Tiff Macklem said in a speech this week. He added that the impact of AI in the labor market has been limited so far. The central bank expects GDP growth to rebound 1.8 percent in the first quarter after stalling in the fourth quarter of 2025, for a 1.1 annual growth of 1.1 percent this year and 1.5 percent in 2027.
Market Consensus Before Announcement
Jobs are expected up 5K in December and the unemployment rate flat at 6.8 percent from 6.8 percent in November.
Definition
The Labour Force Survey is a key economic indicator giving an overall picture of employment and unemployment. Employment counts the number of paid employees working part-time or full-time in the nation's business and government establishments. The unemployment rate measures the number of unemployed as a percentage of the labor force.
Description
As in the U.S., this report is used as an indicator of the health of the domestic economy. Employment trends and break-downs by industry groups highlight the strength in job creation and the implications for future sectoral activity. The unemployment rate is used as an indicator of tightness in labor markets and can foreshadow a future increase in wages. Labor force data provide investors with the earliest signs of industry performance. While other data are produced with a month or two delay, these data are available only a week to 10 days after the end of the latest month. Reactions can be dramatic - especially when the result is unanticipated.
The information in the report is invaluable for investors. By looking at employment trends in the various sectors, investors can take more strategic control of their portfolio. If employment in certain industries is growing, there could be investment opportunities in the firms within that industry.
The bond market will rally (fall) when the employment situation shows weakness (strength). The equity market often rallies with the bond market on weak data because low interest rates are good for stocks. But sometimes the two markets move in opposite directions. After all, a healthy labor market should be favorable for the stock market because it supports economic growth and corporate profits. At the same time, bond traders are more concerned about the potential for inflationary pressures.
The unemployment rate rises during cyclical downturns and falls during periods of rapid economic growth. A rising unemployment rate is associated with a weak or contracting economy and declining interest rates. Conversely, a decreasing unemployment rate is associated with an expanding economy and potentially rising interest rates. The fear is that wages will accelerate if the unemployment rate becomes too low and workers are hard to find.