Canada’s economy experienced a notable setback in February, shedding 84,000 jobs, leading to a rise in the unemployment rate to 6.7 percent, according to Statistics Canada. The decline primarily impacted full-time and private sector employment, offsetting earlier growth observed in the fall. Sectors like wholesale and retail trade, construction, and manufacturing saw significant job losses, with men aged 25 to 54 and young individuals aged 15 to 24 bearing the brunt of the impact.
Key indicators remained relatively stable compared to the previous year, with the unemployment rate at 6.6 percent in February 2025, and marginal changes in the employment rate and the number of full-time or part-time workers. However, the participation rate dipped slightly to 64.9 percent. Average hourly wages saw a 3.9 percent increase, reaching $37.56 per hour.
Katherine Judge, an economist at CIBC Capital Markets, expressed concerns over the labor market’s negative turn, especially the loss of full-time and private sector positions. The unexpected job decline and uptick in unemployment deviated from analyst predictions, signaling increased labor market slack and economic uncertainty.
The latest report, characterized as “exceptionally weak” by economists, revealed varying unemployment rates across Canadian provinces and territories. Youth unemployment, particularly for those aged 15 to 24, rose to 14.1 percent, with higher rates among racialized youth compared to non-racialized counterparts.
Despite some stability in the unemployment rate year-over-year, economists like Douglas Porter from the Bank of Montreal highlighted the persistent weakness in job growth over the past year, signaling a challenging economic outlook. Porter suggested that considering the weak economic performance, the possibility of rate cuts should be actively considered rather than interest rate hikes.
With ongoing economic uncertainties and stagnant job growth, experts do not anticipate interest rate hikes in the near future. The upcoming inflation data release will play a crucial role in the Bank of Canada’s decision-making process regarding interest rates.