Canada’s economy faced a setback as it lost 84,000 jobs in February, leading to an increase in the unemployment rate to 6.7 percent, according to Statistics Canada. The decline in employment was driven by a decrease in full-time and private sector jobs, with losses mainly seen in the goods and services-producing industries. Notably, 18,000 jobs were lost 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 were most affected by the job losses.
Key indicators remained relatively stable compared to the previous year, with the unemployment rate at 6.6 percent in February 2025. The participation rate dropped slightly to 64.9 percent, while average hourly wages increased by 3.9 percent to $37.56 per hour. Katherine Judge, an economist at CIBC Capital Markets, expressed concerns over the labor market’s downturn, highlighting the loss of full-time and private sector positions. Analysts had anticipated a gain of 10,000 jobs, but the actual figures were below expectations.
The rise in unemployment was widespread across provinces and territories, with the youth unemployment rate increasing to 14.1 percent for individuals aged 15 to 24. Racialized youth faced higher unemployment rates compared to non-racialized, non-Indigenous youth. Douglas Porter, chief economist at the Bank of Montreal, noted the weak job growth over the past year, signaling challenges for the economy. He suggested that the Bank of Canada should consider the possibility of rate cuts if economic weakness persists in the coming months.
The report’s “exceptionally weak” nature dampened expectations of interest rate hikes, with Porter advocating for potential rate cuts given the economic challenges ahead. Factors such as higher oil prices, trade uncertainties like the USMCA, and stagnant job growth could further impact consumer spending and economic stability, making a case against rate hikes in the current environment.