Canada’s labour market saw an unexpected boost in January, adding 76,000 new jobs, significantly outpacing economists’ predictions.
According to Statistics Canada’s labour force survey, the unemployment rate dropped to 6.6%, marking the second consecutive monthly decline from a recent high of 6.9% in November.
Economists surveyed by Reuters had anticipated only a third of the job growth and projected a slight increase in unemployment instead.
- Manufacturing sector led the gains with 33,000 new jobs, with a third of those in Ontario.
- Year-over-year, the sector’s employment saw only a modest increase of 28,000 jobs since January 2024.
- Public sector employment fell by 8,400 jobs during the month.
- Full-time employment rose by 35,000, while part-time jobs increased by 40,900.
Statistics Canada noted that nearly 40% of Canada’s 1.9 million manufacturing jobs rely on U.S. demand, with 70% of jobs in the auto sector dependent on American exports.
This data comes amid ongoing trade tensions, as U.S. President Donald Trump has threatened a 25% tariff on all Canadian imports. However, on Monday, Trump paused the tariff plan for one month, following commitments from Canada to designate cartels as terrorist entities and appoint a “fentanyl czar” as a liaison between the two countries.
Despite job growth, wage increases continued to slow in January:
- Hourly wages grew by 3.5% year-over-year, down from 4% in December.
The report suggests that while job growth remains strong, challenges remain in the broader economic outlook, particularly with trade uncertainty and slowing wage gains.