Canada’s economy faced a setback as it shed 84,000 jobs in February, causing the unemployment rate to rise to 6.7 percent, according to Statistics Canada. This decline marked one of the most significant monthly job losses in recent years excluding the pandemic. The decrease in employment was primarily due to a drop in full-time and private sector positions, offsetting a brief growth period observed earlier in the fall.
The job losses were concentrated in goods and services-producing industries, with 18,000 jobs lost in wholesale and retail trade, 12,000 in construction, and 9,200 in manufacturing. Men aged 25 to 54 and youth aged 15 to 24 were the most affected by this downturn.
Key indicators remained relatively stable compared to the previous year, with the unemployment rate at 6.6 percent in February 2025, and the employment rate and number of full-time or part-time workers unchanged. The participation rate decreased slightly to 64.9 percent. Average hourly wages saw a 3.9 percent increase to $37.56 per hour.
Katherine Judge, the executive director and senior economist at CIBC Capital Markets, expressed concerns over the labor market’s negative turn, emphasizing the loss of full-time, private sector roles. Analysts had expected a gain of 10,000 jobs, but the actual outcome was disappointing, leading to a faster rise in the unemployment rate than anticipated.
The report was described as “exceptionally weak” by economists, with the unemployment rate either increasing or remaining stable in nine of the 13 provinces and territories. Youth unemployment, particularly among those aged 15 to 24, climbed to 14.1 percent, highlighting ongoing challenges faced by this demographic. Racialized youth experienced notably higher unemployment rates compared to non-racialized, non-Indigenous youth.
Douglas Porter, the chief economist at the Bank of Montreal, noted the lack of job growth over the past year, indicating a sluggish start for the economy in 2026. This underlines the need for cautious economic policies, with Porter suggesting that rate cuts should be considered if the economic weakness persists in the coming months.
The disappointing job market performance in February has dispelled expectations of potential interest rate hikes, with Porter even suggesting the possibility of rate cuts if economic conditions deteriorate further. Uncertainties surrounding factors such as the USMCA and lack of job growth are likely to influence the Bank of Canada’s monetary policy decisions moving forward.
