Employment declined by 84,000 (-0.4%) in February and the employment rate fell 0.2 percentage points to 60.6%. The unemployment rate increased 0.2 percentage points to 6.7%, according to a report released Friday by Statistics Canada.
Employment fell among youth aged 15 to 24 years old (-47,000; -1.7%) and men in the core working age of 25 to 54 years old (-41,000; -0.6%). Employment was little changed for core-aged women and people aged 55 years and older, said the federal agency.
“Employment declines in February were recorded in services-producing industries (-56,000; -0.3%) and goods-producing industries (-28,000; -0.7%). The largest declines were in wholesale and retail trade (-18,000; -0.6%), and ‘other services’ such as personal and repair services (-14,000; -1.8%),” said Statistics Canada.
Employment had edged down as well in January (-25,000; -0.1%).
In February, the employment rate—the proportion of the population aged 15 and older who are employed—fell 0.2 percentage points to 60.6%, the second consecutive monthly decline. The employment rate in February was just above the recent low of 60.5% observed in August 2025, and was down 0.4 percentage points on a year-over-year basis, said the report.
“In February, the number of people working full-time declined by 108,000 (-0.6%), offsetting growth recorded over the previous two months. At the same time, there was little variation in the number of people working part-time in February. On a year-over-year basis, there was little change in the number of people working full-time or part-time,” it said.
“The number of employees in the private sector fell by 73,000 (-0.5%) in February, the second consecutive monthly decline. These declines offset gains observed in October and November 2025. Compared with 12 months earlier, the number of private sector employees was virtually unchanged in February. The number of public sector employees and the number of self-employed workers were both little changed in February.”
“In services-producing industries, the largest decline was in wholesale and retail trade (-18,000; -0.6%). Employment in this industry has trended down since October 2025, with a cumulative decline of 52,000 (-1.7%) over this period.”
Katherine Judge, Senior Economist, CIBC Capital Markets, said: “Overall, this is clearly a very worrisome report for the BoC (Bank of Canada) that shows that labour market slack has increased and activity is frozen amidst trade uncertainty.”
Andrew Hencic, Senior Economist, TD, said this was a decidedly weak report.
“Not only did employment decline, but the labour force contracted for a second consecutive month. Even looking through some of the noise in the top-line jobs figures, the unemployment rate rose again, reversing most of last month’s improvements. Undoubtedly, the report was weaker than expected, but looking through the noise shows an economy that has struggled to gain traction. Something that was to be expected given the structural changes Canada is facing,” he said.
“Looking forward, we are expecting the labour market to tread water in 2026, as a rapid slowdown in population growth drags on labour supply, and soft economic momentum limits hiring. The wildcard to all of this is how big the inflation shock from the ongoing conflict in the Middle East will be. The duration of the supply disruption remains highly uncertain, but its length will impact inflation and, thereafter, consumer spending and the economy at large.”
Douglas Porter, Chief Economist, BMO Capital Markets, said: “No sense sugar-coating this one—this is simply a brutal result, and the near absence of net job growth in the past year is perhaps the most telling reading here. While a tough winter may have exaggerated the weakness at the start of the year, and a shrinking labor force is also weighing heavily on headline employment, the underlying story so far in 2026 is one of weakness.
“A range of other indicators for January, including a 3% drop in manufacturing sales, reinforces the point that the economy stumbled out of the gate this year. And now the economy has to contend with higher energy costs flowing from the Iran conflict. Somehow, the market continues to price in Bank of Canada rate hikes for later this year, but if this employment report is at all indicative of underlying economic conditions, the last thing the Bank would be considering would be rate hikes.”
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