Employment dips, jobless rate falls in January

Canada’s labour market started 2026 on a softer note, with employment edging down in January even as the unemployment rate fell — not because of surging hiring, but because fewer people were looking for work.

Employment slipped by 25,000 positions in January, a 0.1-per-cent decline, pushing the employment rate down 0.1 percentage points to 60.8 per cent, according to the latest Labour Force Survey from Statistics Canada. The drop follows a period of relative stability at the end of 2025.

At the same time, the unemployment rate fell 0.3 percentage points to 6.5 per cent, its lowest level since September 2024. But that improvement was driven largely by a sharp decline in the number of people searching for work — down 94,000, or 6.1 per cent — and by a lower labour force participation rate, which slipped to 65.0 per cent.

Full-time work up, part-time down

Behind the modest headline decline in employment, the composition of jobs continues to shift. Part-time employment fell by 70,000 positions in January (down 1.8 per cent), partly offset by a gain of 45,000 full-time jobs (up 0.3 per cent).

Compared with January 2025, total employment is still higher by 134,000 (0.6 per cent), driven entirely by a 149,000 increase in full-time positions (0.9 per cent). The number of private sector employees slipped by 52,000 (0.4 per cent) in January, trimming some of the net gains seen in late 2025, while public sector employment and self-employment were little changed, says StatCan.

Average hourly wages continued to grow at a solid pace. Year over year, wages rose 3.3 per cent, or $1.18, to $37.17 in January, following 3.4 per cent growth in December (not seasonally adjusted).

Core-aged women see job losses

The weakness in January was concentrated among core-aged women. Employment for women aged 25 to 54 fell by 27,000 (0.4 per cent), while employment among core-aged men held steady. Other major demographic groups saw little change in employment levels.

Despite the job losses, unemployment rates fell for most groups, again reflecting fewer people actively seeking work, says StatCan.

For core-aged men, the unemployment rate declined 0.6 percentage points to 5.4 per cent — the lowest since July 2024 — as fewer were searching for work. Among core-aged women, the unemployment rate eased 0.2 percentage points to 5.7 per cent, partly reversing an increase the month before; both employment and job search activity declined in this group.

Youth aged 15 to 24 saw their unemployment rate fall 0.5 percentage points to 12.8 per cent, as employment was little changed but fewer young people were looking for work. That rate is now 1.8 percentage points below the recent peak of 14.6 per cent recorded in September 2025. For those 55 and older, the unemployment rate held steady at 5.1 per cent.

Growing numbers outside labour force

In total, 12.4 million Canadians aged 15 and over were not participating in the labour force in January — neither employed nor looking for work — up 2.7 per cent from a year earlier (not seasonally adjusted), says StatCan.

Population aging continues to play a central role, but other factors such as school enrolment and health also matter. Among youth outside the labour force, nearly nine in 10 (89.0 per cent) reported that their main activity was attending school, up 2.2 percentage points from January 2025.

For core-aged adults not participating, caregiving and health are key drivers: 25.9 per cent cited caring for children and 23.2 per cent reported illness or disability as their main reason for being out of the labour force. Among those aged 55 and older, nearly 80 per cent (79.9 per cent) said they were retired, a share that has changed little over the past year.

Discouraged job seekers — people who say they are not looking for work because they believe none is available that suits them — remain a small group but have edged up, says StatCan. In January, they represented 0.3 per cent of those outside the labour force, or about 34,000 people, up 0.1 percentage points compared with a year earlier.

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Manufacturing hit hard as services sectors gain

Industrially, January brought a notable setback for manufacturing. Employment in the sector fell by 28,000 (1.5 per cent), returning to levels last seen in August 2025. On a year-over-year basis, manufacturing employment is down 51,000 (2.7 per cent), with the latest decline concentrated in Ontario.

Educational services also shed 24,000 jobs (1.5 per cent), while public administration employment declined by 10,000 (0.8 per cent). Both sectors are roughly flat compared with a year earlier, says StatCan.

In contrast, several service industries posted gains. Employment in information, culture and recreation rose by 17,000 (2.0 per cent) in January, continuing an upward trend that began in September 2025; employment in this sector is now up 30,000 (3.6 per cent) year over year. Business, building and other support services added 14,000 jobs (2.1 per cent), the first increase since October 2024, though employment in this industry remains 38,000 (5.3 per cent) below levels a year ago.

Agriculture and utilities also saw increases, with employment rising by 11,000 (4.5 per cent) and 4,200 (2.5 per cent), respectively.

Ontario down, Prairies and Atlantic Canada up

Regionally, the labour market picture was mixed.

Ontario saw the largest decline, with employment dropping by 67,000 (0.8 per cent) in January. Yet the province’s unemployment rate fell 0.6 percentage points to 7.3 per cent, as fewer Ontarians searched for work. The labour force participation rate in Ontario slid 1.0 percentage points to 64.4 per cent, more than erasing the increase recorded in December, says StatCan.

The pullback was most pronounced among youth, whose participation rate fell 2.7 percentage points to 58.9 per cent.

In Alberta, employment rose by 20,000 (0.8 per cent), bringing net gains since January 2025 to 86,000 (3.4 per cent). The province’s unemployment rate edged down to 6.4 per cent.

Saskatchewan and Newfoundland and Labrador also posted gains. Saskatchewan added 6,100 jobs (1.0 per cent), pushing its unemployment rate down 1.1 percentage points to 5.3 per cent. Newfoundland and Labrador saw employment grow by 3,800 (1.6 per cent), with its unemployment rate dropping 1.3 percentage points to 9.2 per cent. Other provinces saw little change.

Export-exposed industries see more churn

The survey highlights growing unease among workers in industries highly dependent on U.S. demand for Canadian exports — sectors that face greater exposure to tariff-related disruptions and trade uncertainty, says StatCan.

In January 2026, 5.4 per cent of permanent core-aged employees in export-dependent industries reported plans to leave their job in the next 12 months, up 1.5 percentage points from a year earlier. While intentions to leave also rose in other industries, the increase was smaller, from 5.2 to 5.9 per cent.

Historically, employees in export-reliant industries have been less likely to say they plan to leave, reflecting the prevalence of full-time roles and above-average wages, says StatCan. The latest data suggest that heightened uncertainty may now be nudging more of these workers to consider their options.

Among core-aged permanent employees who were planning to leave, nearly two-thirds (65.8 per cent) of those in export-dependent industries said they had already taken active steps to find a new job in the previous four weeks — such as answering job ads or contacting employers. In other industries, less than half (48.6 per cent) of would-be leavers reported such active job search.

For employers, especially in sectors tied closely to U.S. demand, the combination of modest job growth, shifting participation and rising quit intentions points to a labour market where retention strategies, competitive pay and clear career paths may become even more critical in the year ahead.