Canada’s economy experienced an unexpected downturn in February, shedding 83,900 jobs and pushing the Canada unemployment rate up to 6.7%. This significant decline highlights the ongoing challenges facing the country’s labour market, largely attributed to global trade uncertainties.
The latest report from Statistics Canada revealed a substantial drop in full-time employment, with a loss of 108,000 positions last month. While part-time employment remained relatively stable, the private sector bore the brunt of the decline, losing 73,000 jobs. This paints a concerning picture of the current economic climate and the Canadian job market.
Key Sectors Affected by Job Losses
- Wholesale and Retail Trade: Experienced a significant decrease of 18,000 jobs (0.6% decline), accumulating a loss of 52,000 positions since October.
- Manufacturing and Construction: Combined losses totalled 21,200 jobs in February.
Quebec was particularly hard hit, with a loss of 57,000 jobs – the largest monthly decrease in four years, raising the provincial unemployment rate to 5.9%. This downturn underscores the regional disparities within the Canadian economy.
February’s job report represents the largest monthly decline in employment since January 2022, when the economy was still grappling with the stringent public health measures of the COVID-19 pandemic. The results significantly underperformed economists’ expectations, who had predicted a modest gain of 10,000 positions.
Expert Analysis and Future Outlook
Bank of Montreal chief economist Douglas Porter described the report as “weak from head to toe,” noting that recent job losses have erased the gains made last fall. He emphasized that overall employment growth has stalled, increasing by only 0.2% year-over-year. This suggests a concerning trend of near-zero job creation in the past year. Porter argues that this report should dissuade the Bank of Canada from considering any interest rate hikes.
CIBC Capital Markets senior economist Katherine Judge echoed these concerns, stating that the numbers are “worrisome” and indicate increasing slack in the labour market amid ongoing trade uncertainty. The report also revealed a decrease in the labour participation rate, falling to 64.9% in February, potentially linked to a decline in temporary residents and slower population growth. Statistics Canada provides further details on labour force statistics.
Youth unemployment also saw a significant increase, rising to 14.1% – levels not seen since the fall of 2025. Looking ahead, economists predict continued weakness in the labour market throughout 2026, driven by slowing population growth and subdued economic momentum. The potential for further economic disruption from geopolitical events, such as the conflict in the Middle East and rising energy costs, adds to the uncertainty. Toronto Dominion-Bank’s senior economist Andrew Hencic highlighted the impact of inflation shocks on consumer spending and the overall economy.
