Canada’s economy experienced a setback in February, shedding 84,000 jobs, causing the unemployment rate to rise to 6.7%, as per Statistics Canada. This decline in employment was primarily due to decreases in full-time and private sector positions, offsetting earlier growth seen in the fall. Job losses were notable in various industries, including 18,000 in wholesale and retail trade, 12,000 in construction, and 9,200 in manufacturing. Men aged 25 to 54 and young individuals aged 15 to 24 were most affected by this downturn.
Key indicators remained largely stable compared to the previous year, with the unemployment rate at 6.6% in February 2025. The participation rate decreased slightly to 64.9%, while average hourly wages increased by 3.9% to $37.56 per hour. Katherine Judge, an economist at CIBC Capital Markets, expressed concern over the loss of full-time, private sector roles, attributing the labor market’s worrisome turn to these developments.
The unexpected job losses and rise in unemployment were contrary to analyst predictions of a modest job gain and a slower increase in the unemployment rate. The current scenario indicates increased labor market slack and economic stagnation amid trade uncertainties, according to Judge. The Bank of Canada awaits the upcoming inflation data release before its next interest rate decision, with most economists anticipating that the rates will remain unchanged.
The employment situation was described as “exceptionally weak” by economists, with the unemployment rate either rising or remaining stable across most provinces and territories in the past month. Youth unemployment, particularly for those aged 15 to 24, increased to 14.1%, with racialized youth experiencing notably higher rates compared to non-racialized, non-Indigenous youth, as highlighted by Statistics Canada’s data.
Douglas Porter, the chief economist at the Bank of Montreal, noted the lack of significant job growth in the last year, emphasizing the negative impact on the economy. He suggested that the weak job market conditions at the beginning of the year should dispel any expectations of interest rate hikes, with a possibility of rate cuts if economic weakness persists. Porter highlighted factors like consumer financial strain from higher oil prices, uncertainties surrounding the USMCA, and stagnant job growth as reasons for the Bank of Canada to refrain from considering rate hikes in the current environment.