Ottawa (Rajeev Sharma): Canada’s economy recorded a net loss of 25,000 jobs in January, but the national unemployment rate edged down to 6.5 per cent as fewer people participated in the labour market, according to new data released by Statistics Canada.
The decline in employment was largely driven by losses in the private sector and part-time positions, with women aged 25 to 54 most affected. Despite the drop in jobs, the unemployment rate fell from 6.8 per cent in December, reflecting a notable decrease in the number of Canadians actively seeking work.
Ontario accounted for a significant share of the job losses, particularly in manufacturing. Statistics Canada reported that the manufacturing sector shed 28,000 jobs in January and has lost approximately 51,000 positions compared with a year earlier, a period that predates the impact of U.S. tariffs on the industry.
Employment also declined in education and in professional, scientific and technical services. These losses were partially offset by gains in information, culture and recreation, as well as in business, building and other support services.
Average hourly wages continued to rise, increasing 3.3 per cent on a year-over-year basis in January, though this marked a slight slowdown from December’s pace.
January’s data represents the first monthly net job loss since August. Statistics Canada attributed the lower unemployment rate to a contraction in the labour force, which fell by 119,000 people — the steepest decline in five years.
Bradley Saunders, North America economist at Capital Economics, said slowing population growth means the economy now requires fewer new jobs to maintain a stable unemployment rate. He expects the jobless rate to continue declining over the course of the year.
The agency reported that 12.4 million Canadians aged 15 and older were outside the labour force in January, an increase of 2.7 per cent compared with the same month last year. Among them, 34,000 were classified as discouraged workers — individuals who believe suitable jobs are not available for them — representing a slight increase from a year earlier.
Unemployment among youth aged 15 to 24 also declined by half a percentage point in January, largely because fewer young people were searching for work. At the same time, the proportion of youth identifying school as their primary activity rose by 2.2 percentage points year-over-year.
Additional surveys conducted by Statistics Canada indicated rising uncertainty among workers in industries dependent on U.S. trade. About 5.4 per cent of permanent core-aged employees in export-reliant sectors said they plan to leave their jobs within the next year, up 1.5 percentage points from a year earlier.
Bank of Canada Governor Tiff Macklem said Thursday that he anticipates an uneven labour market recovery in 2025, with gains in some sectors offset by slower progress in others. The central bank held its key interest rate at 2.25 per cent last week and is scheduled to make its next rate decision on March 18.
TD Bank senior economist Andrew Hencic said the decline in unemployment suggests the labour market is performing better than expected, though he cautioned it should not be viewed as tight. He added that the January figures are unlikely to influence the Bank of Canada’s policy stance in the near term, with policymakers expected to wait for further economic data before adjusting rates.
