Canada’s labour market saw notable growth in January, with employment increasing by 76,000 (+0.4%). This increase followed a strong December (+91,000) and November (+44,000), marking a third consecutive month of positive employment gains. As a result, the employment rate rose by 0.1 percentage points to 61.1%, reflecting a shift from a period of employment declines between April 2023 and October 2024, according to a report released Friday by Statistics Canada.
The unemployment rate also decreased by 0.1 percentage points to 6.6% in January, continuing a downward trend that began in November 2024. The decrease was primarily driven by youth aged 15 to 24, whose unemployment rate fell to 13.6%, down from a high of 14.2% in previous months, said the federal agency.
Employment Growth Across Demographics
In January, employment gains were seen across various demographic groups. Youth aged 15 to 24 experienced an increase of 31,000 (+1.1%), largely driven by a rise in employment among young men (+25,000; +1.8%). The employment rate for this group rose by 0.6 percentage points to 54.5%, marking the first increase since April 2024, said the report.
Employment for core-aged individuals, aged 25 to 54, also saw notable growth, with women (+36,000; +0.5%) and men (+28,000; +0.4%) in this group contributing to the overall rise. Core-aged men saw their employment increase for the third consecutive month, while women’s employment rebounded after several months of stagnation, added StatsCan.
Regional Employment Trends
Ontario led the way in provincial employment growth, adding 39,000 jobs (+0.5%) in January. British Columbia followed with an increase of 23,000 jobs (+0.8%), and New Brunswick added 2,900 jobs (+0.7%). Other provinces saw little change in employment during the same period, according to the report.
Sector-Specific Gains
The manufacturing sector was a key driver of the January increase, adding 33,000 jobs (+1.8%). Gains were particularly strong in Ontario, Quebec, and British Columbia. Similarly, employment in professional, scientific, and technical services grew by 22,000 (+1.1%), continuing a trend of expansion in this sector.
Other industries that saw job increases included construction (+19,000; +1.2%), accommodation and food services (+15,000; +1.3%), and transportation and warehousing (+13,000; +1.2%). However, the “other services” sector, which includes personal and repair services, experienced a decline of 14,000 jobs (-1.8%), added Statistics Canada.
Wages and Hours Worked
The report said average hourly wages increased by 3.5% (+$1.23 to $35.99) compared to January 2024, continuing a steady rise but slowing from previous months. The total hours worked also saw an increase, with total actual hours worked rising by 0.9% in January and up 2.2% year-over-year.
January’s data points to continued resilience in Canada’s labour market, particularly among youth and core-aged workers. Despite challenges in certain sectors and a slower pace of wage growth, the decrease in the unemployment rate and the steady rise in jobs across various industries and regions suggest a positive trend for the Canadian economy in early 2025.
“Three consecutive months of solid job growth suggests the cyclical boost to Canada’s economy from lower interest rates is clearly taking effect. Unfortunately, the imminent threat of tariffs hanging over the Canadian economy, is likely to temper business confidence and could weigh on hiring in some sectors in the coming months,” said Leslie Preston, Managing Director & Senior Economist, TD Economics.
“The Bank of Canada continued to lower interest rates in January, such that interest rates are no longer a drag on the economy. Now it is over to Canadian governments to do what they can (see commentary) to improve the competitiveness of the economy in the face of the tariff threat.”
Douglas Porter, Chief Economist at BMO Capital Markets, said: “If we weren’t all absorbed with the possibility of a trade war, we would be talking about the comeback in the Canadian domestic economy in recent months. The turnaround in job growth, even amid cooler population trends, reinforces the message from firmer auto and home sales that the economy was turning a corner thanks to the heavy-duty drop in interest rates in the past eight months. Alas, we still need to contend with the lingering uncertainty on the trade front, which casts a cloud over these sunny jobs figures. For the Bank of Canada, there is little here crying out for further near-term rate relief, but the clear and present trade risks will keep rate-cut hopes alive. The moderation in wages does give the BoC a bit more room to manoeuvre should a trade war erupt.”
Andrew Grantham, Senior Economist, CIBC Capital Markets, said: “Overall, this is clearly a very positive report once again. However, even after the improvement seen during the past two months, the unemployment rate is still only just back to where it stood in October, and is still consistent with a labour market with plenty of slack. We continue to think that even lower interest rates will be needed for the economy to fully absorb that slack, particularly given heightened trade uncertainty which could impact hiring decisions ahead.”
