Canada’s economy faced a setback as it shed 84,000 jobs in February, causing the unemployment rate to rise to 6.7 per cent, according to Statistics Canada. This decline marked one of the most significant monthly job losses witnessed outside the pandemic, impacting the labor market adversely. The decrease in employment was primarily fueled by reductions in full-time and private sector positions, offsetting a brief period of growth observed earlier in autumn.
The job losses were predominantly observed in industries producing goods and services, with declines of 18,000 jobs in wholesale and retail trade, 12,000 in construction, and 9,200 in manufacturing. Men aged 25 to 54 and young individuals aged 15 to 24 bore the brunt of this decline.
Key indicators remained relatively stable compared to the same period last year, with the unemployment rate at 6.6 per cent in February 2025. The participation rate dipped slightly to 64.9 per cent, while average hourly wages increased by 3.9 per cent to $37.56 per hour.
Katherine Judge, the executive director and senior economist at CIBC Capital Markets, expressed concern over the labor market’s negative turn in February. The unexpected loss of full-time private sector roles contrasted with analysts’ expectations of a gain of 10,000 jobs and a slower increase in the unemployment rate.
Economist Douglas Porter, from the Bank of Montreal, described the latest report as “exceptionally weak.” Noting the lack of job growth over the past year, Porter emphasized the negative implications for the economy. He suggested that the central bank might need to consider the possibility of rate cuts if economic weakness persists in the coming months.
The unemployment rate either rose or remained unchanged in nine out of 13 provinces and territories last month. The youth unemployment rate for individuals aged 15 to 24 increased to 14.1 per cent, particularly affecting racialized youth compared to non-racialized, non-Indigenous youth.
Overall, the weak job market conditions and uncertainty surrounding trade agreements and oil prices could prompt the Bank of Canada to hold off on interest rate hikes and potentially consider rate cuts in the future.