Canada Loses 25,000 Jobs While Unemployment Falls
This news highlighted the complex dynamics now shaping the country’s economic outlook. According to new data from Statistics Canada, the economy lost a net 24,800 positions during the month, defying expectations for modest job growth.
At the same time, the unemployment rate dropped from 6.8 per cent in December to 6.5 per cent, largely because fewer Canadians were actively seeking work. Economists had anticipated a steady jobless rate alongside a small employment gain.
The apparent contradiction reflects a shrinking labour force rather than a surge in hiring. Roughly 119,000 people exited the workforce in January, marking one of the steepest non-pandemic declines on record. The participation rate fell 0.4 percentage points to 65 per cent. Analysts attributed the drop to broader demographic trends and slower population growth.
Despite the headline job loss, the composition of employment shifted in a more encouraging direction. Part-time positions fell sharply by 70,000, while full-time employment rose by 49,000. Over the past year, Canada has added a solid number of full-time roles while trimming part-time work, suggesting some underlying resilience in job quality even as overall hiring slows.
Losses were concentrated among core-aged women between 25 and 54 years old, who saw employment decline by 27,000 positions. However, unemployment rates for both core-aged women and men decreased, largely because fewer individuals in those groups were searching for work. The unemployment rate for core-aged men fell to its lowest level since mid-2024.
Sector data painted a mixed picture. Manufacturing led declines, shedding 28,000 jobs, while educational services and public administration also contracted. On the positive side, information, culture and recreation posted gains, alongside business support services and agriculture.
Economists broadly described the report as balanced but unlikely to alter monetary policy. Analysts at CIBC and TD suggested that while the unemployment rate appears healthier than expected, it remains above levels typically associated with stable inflation.
RBC economists have noted that Canada’s breakeven employment growth rate may now be slightly negative. That means modest monthly job losses could still coincide with a steady or even falling unemployment rate, given demographic shifts and immigration patterns.
While the jobless rate is now tied for its lowest level in the past 18 months, some experts caution that the decline offers limited comfort. With slower population growth driving much of the change, many households continue to face financial strain amid high living costs and uneven wage growth.
After modest gains in late 2025, January’s figures suggest Canada’s labour market is neither overheating nor collapsing, but instead treading water as policymakers watch for clearer signs of economic direction.
