Canada’s economy shed an estimated 25,000 jobs in January even as the national unemployment rate fell to 6.5 per cent, Statistics Canada reported Friday, Feb.6. The loss in employment followed expectations for a small rise and came alongside a drop in the number of people looking for work, which contributed to the lower jobless rate.

The decline in employment interrupted a run of modest gains recorded in the final months of 2025 but was not evenly spread across the economy. Part-time work declined sharply while full-time positions increased, a combination that reflects shifting patterns in labour demand and underscores the complexity of the current job market. The overall employment rate edged down, and the labour force participation rate slipped, a sign that some people left the workforce rather than found work.

Manufacturing and educational services were among the sectors posting the largest job losses, with manufacturing particularly weak due to ongoing trade pressures and lower output. Other industries such as information, culture and recreation recorded gains, but they were not enough to offset broader contractions elsewhere. Many of the job losses were concentrated in Ontario, although other provinces recorded small increases in jobs.

Economists said the dual readings — fewer workers and a lower unemployment rate — complicate policy-maker assessments of the labour market. A falling jobless rate is typically interpreted as a sign of tight labour conditions, but in this case it was driven largely by a smaller pool of job seekers. That has implications for consumption and wage growth, key indicators watched by the Bank of Canada as it sets interest-rate policy. 

The Labour Force Survey also showed demographic variation in January. Job losses were concentrated among workers aged 25 to 54, particularly women, while youth unemployment ticked lower amid a smaller youth labour force. The number of people participating in the labour market fell by more than the decline in employment, which mechanically pushed the unemployment rate down even as jobs were lost.

Average hourly wages for permanent employees rose modestly on a year-over-year basis, a measure closely watched by businesses and policy makers trying to gauge underlying inflation pressures. The mixed signals from the labour market — falling unemployment alongside job losses — are likely to leave central bank officials and analysts parsing the data carefully as they look ahead to future economic reports and adjust growth expectations. 

Stats Canada - Government of Canada