Canada Economy Loses 83,900 Jobs in February, Unemployment Rises to 6.7%

Based on coverage from Investing.com, Yahoo Finance, Reuters, Morningstar, Winnipeg Free Press, and Sudbury.com.

Canada’s job market took a hard step backward in February, with Statistics Canada reporting a net loss of about 83,900 jobs and the unemployment rate rising to 6.7%. The drop was broad, hitting both services and goods industries, and it was driven mainly by full-time work disappearing.

The significant job losses reported for February come amid ongoing discussions about the state of Canada's labor market, as detailed in a recent article on the federal government's investment of $94.5 million in labor market data across Canada, which aims to better understand employment trends and challenges. For further context, see the federal government's investment in labor market data.

Economists were expecting the opposite: roughly 10,000 jobs added and an unemployment rate of 6.6%, according to consensus estimates cited by BMO.

Canada employment report shows sharp February drop

StatsCan says February’s decline is one of the worst non-pandemic months in years. Reuters notes a fall of this size hasn’t been seen in nearly 17 years, setting aside the lockdown months during COVID-19. Another report frames it as the biggest monthly loss since early 2009 outside the pandemic.

January was also weak, with about 24,800 jobs lost, but February was the gut punch. Taken together, January and February mean the economy has shed about 109,000 jobs, clawing back a big chunk of the 189,000 positions added between September and December.

Full-time and private sector jobs take hit

The damage was concentrated in full-time positions. StatsCan reported about 108,400 fewer full-time jobs in February, while part-time work increased by about 24,500. Private sector employment fell by roughly 72,600 to 73,000 positions (the sources round slightly differently), and government employment also declined by about 17,100.

StatsCan also tracked a softer underlying picture: the labour force shrank by 27,200 in February after a 119,000 drop in January, and the participation rate edged down to 64.9%. The employment rate slipped to 60.6% from 60.8%.

Youth unemployment rises across Canada

Younger workers were hit especially hard. StatsCan reported 47,000 jobs lost among people aged 15 to 24, pushing youth unemployment up 1.3 percentage points to 14.1%. StatsCan describes that as close to a recent high seen last September.

Even the so-called core-aged group (25 to 54) saw real weakness: employment fell by about 37,000. One source calls it the biggest drop since August last year, while Reuters describes it as the largest since January 2022, a difference likely tied to revisions or comparisons but pointing to the same takeaway: the weakness is no longer limited to students and new grads.

Services and goods sectors both weaken

This wasn’t a one-industry slump. Services employment fell by about 56,200, while goods-producing jobs dropped about 27,900 to 28,000.

The Canadian Press breaks out some of the bigger moves inside services: wholesale and retail trade lost about 18,000 jobs, and “other services” (a wide bucket including personal care and repair/maintenance) fell by about 14,000. On the positive side, transportation and warehousing added just over 10,000 jobs, and public administration gained 8,100.

In goods industries, construction and manufacturing both declined.

Quebec and B.C. post notable job losses

Regionally, the losses weren’t evenly spread. Canadian Press reports Quebec lost 57,000 jobs, described as the province’s first significant employment drop in more than four years. Quebec’s unemployment rate rose 0.7 percentage points to 5.9%.

British Columbia shed 20,000 jobs, and Saskatchewan and Manitoba also lost employment. Ontario was roughly flat for jobs, but 28,000 more people started searching for work, helping push unemployment up there too.

Bank of Canada rate decision looms

The timing matters: the February numbers land just days before the Bank of Canada’s March 18 interest rate decision.

Economists sounded alarmed. BMO chief economist Douglas Porter called the report “simply brutal,” arguing it doesn’t look like an economy where rate hikes should be on the table. CIBC economist Katherine Judge called it “very worrisome,” pointing to labour market slack growing amid trade uncertainty.

One wrinkle for the BoC: wage growth picked up. Average hourly wages for permanent employees rose 4.2% year-over-year, up from 3.3% the month before, which complicates the inflation fight even as job losses mount. Markets reacted quickly, with the Canadian dollar weakening to around 73.03 US cents and two-year Government of Canada bond yields falling.

Trade uncertainty is also hanging over the outlook. Reuters ties recent weakness to U.S. tariffs under President Donald Trump affecting sectors like steel, autos, lumber and copper, with economists warning more layoffs could follow as businesses hold back on investment.

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