In January, the Canadian job market showed a mixed picture as the economy shed 25,000 jobs, yet the unemployment rate dropped to 6.5 percent, marking its lowest level since September 2024, according to Statistics Canada. The decrease in the jobless rate was attributed to fewer individuals actively seeking employment.
The decline in employment was primarily driven by losses in the manufacturing sector, which has been adversely affected by U.S. tariffs over the past 10 months. Additionally, educational services and public administration experienced a decrease in employment.
Douglas Porter, BMO’s chief economist, noted that the current economic landscape is grappling with several significant changes simultaneously, including U.S. tariffs impacting manufacturing, a slowdown in population growth, and an increase in the older population demographic. Porter highlighted that despite the decline in jobs and hours worked, the Bank of Canada is unlikely to adjust its key interest rate based on this report.
In terms of employment changes, part-time jobs saw a notable decline of 1.8 percent, while there was a slight increase in full-time positions. Private-sector employment dropped by 52,000, partially offsetting gains from the previous three months. The public sector witnessed minimal changes in employment numbers.
Some sectors saw job gains in January, including information, culture, and recreation; business and support services; agriculture; and utilities. Ontario experienced a decrease of 67,000 jobs, mainly in the manufacturing sector, while Alberta, Saskatchewan, and Newfoundland and Labrador recorded job gains.
Average hourly wages rose by 3.3 percent, reaching $37.17 per hour compared to the previous year. Despite the mixed results in employment and unemployment, economists like Andrew Grantham from CIBC Capital Markets do not anticipate significant implications on the Bank of Canada’s interest rate decisions, maintaining the view that rates will remain unchanged for the rest of the year.