Canada Employment Falls by 24,800, Jobless Rate Down to 6.5%

Jobseekers at career fair in Montreal. Photo by Graham Hughes /Bloomberg

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(Bloomberg) — The Canadian economy shed 24,800 jobs last month, with the largest employment losses in manufacturing as US tariffs continue to take a bite out of the sector.

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However, the impact of the job losses on the unemployment rate was counterbalanced by fewer people looking for work, allowing the rate to fall to 6.5%, Statistics Canada’s labor force survey showed on Friday.

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Economists surveyed by Bloomberg were expecting a slight employment increase of 5,000 and for the jobless rate to hold steady at 6.8%.

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January’s employment decline was the steepest since August, with Ontario’s labor market taking the largest hit, losing 67,000 jobs. President Donald Trump’s tariffs have been particularly punishing for Canada’s most populous province, which is home to the country’s automotive sector.

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Last week, General Motors Co. officially laid off 500 workers at its plant in Oshawa, Ontario, as it shut down one of its shifts.

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Nationally, manufacturing jobs have declined by 51,000 since January 2025. The drop last month of 27,500 positions was the biggest since April 2020.

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The loonie extended the day’s gains versus the US dollar after the release, rallying some 0.4% to C$1.3661 as of 8:35 a.m. in Ottawa. Canadian bond yields climbed on the data, with the benchmark 10-year yield up about two basis points to 3.41%. Traders continue to see a small chance of an interest-rate hike from the Bank of Canada by the end of the year.

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Additional data collected in January’s labor force survey suggests the trade war may be pushing some workers in industries dependent on the US to consider leaving their jobs.

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According to the report, 5.4% of permanent core-aged employees in industries dependent on US demand for Canadian exports were planning to leave their jobs over the next 12 months. That proportion was up 1.5 percentage points from a year ago, compared to a smaller increase of 0.7 percentage points for workers in other industries.

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“In prior years, the share of permanent employees who were planning to leave their job had been lower among employees working in industries dependent on US demand for Canadian exports. These employees are more likely to have full-time hours and above-average wages relative to other industries,” Statistics Canada said.

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Meanwhile, January’s decline in the unemployment rate is attributed to fewer Canadians looking for work last month, with the labor force participation rate declining by 0.4 percentage points to 65% — the lowest since 2021.

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According to Statistics Canada, there were 12.4 million people aged 15 and older who were not participating in the job market last month, up 2.7% from a year ago.

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The decline in the labor force participation rate — which fell to the lowest since 2021 —  coincides with an aging population and federal curbs on immigration.