Senior economist cites 'lack of positive details' in Labour Force Survey
Canada’s labour market stumbled badly in February, posting its weakest performance in months as employment fell sharply and more Canadians found themselves out of work.
According to the latest Labour Force Survey from Statistics Canada, employment dropped by 84,000 positions in February, a 0.4‑per‑cent decline, pulling the employment rate down 0.2 percentage points to 60.6 per cent. At the same time, the unemployment rate climbed 0.2 percentage points to 6.7 per cent.
Indeed senior economist Brendon Bernard called it “one of the weakest monthly prints we’ve seen in a while,” noting that “there weren’t many positive details beneath the surface.”
Companies are in a wait-and-see mode and will likely remain there until we get further clarification on how recent events impact various industries, according to Willson Cross, CEO and Co-Founder of Borderless AI.
Full-time private-sector roles take hit
The pullback was concentrated in full-time and private‑sector work, amplifying concern for job seekers.
Full-time employment fell by 108,000 jobs in February (down 0.6 per cent), effectively wiping out gains made over the previous two months. Part‑time work was little changed, suggesting that February’s decline represents a genuine cooling in labour demand rather than a simple shift between job types, says Statistics Canada.
Private‑sector employees bore the brunt of the downturn. Their numbers dropped by 73,000 (0.5 per cent), marking a second consecutive monthly decline and erasing much of the strength seen in October and November of last year. Public‑sector employment and self‑employment were essentially flat.
“The net decline was led by full-time private sector employees, hours worked also fell, and the drop was widespread across sectors,” says Bernard. “Only three out of 16 industries added workers.”
Youth and core‑aged men see notable losses
Demographically, younger workers and core‑aged men were hit hardest by February’s slide.
Employment among youth aged 15 to 24 fell by 47,000, a 1.7‑per‑cent decline, says Statistics Canada. Men in the core working ages of 25 to 54 also saw a significant setback, with employment down 41,000 (0.6 per cent). Employment was little changed for core‑aged women and people aged 55 and older.
Bernard notes that some of this weakness may represent a reversal of earlier‑than‑expected strength at the end of 2025.
“Youth employment rates in particular have fallen back to their September levels after bouncing up toward the end of the year,” he says. “To the extent that the previous strength was exaggerated, the trend has returned back to the mean.”
The uptick in the unemployment rate actually understates the softness in the market, he argues, because it was accompanied by a dip in labour force participation. The participation rate fell 0.1 percentage points to 64.9 per cent in February and is 0.4 points lower than a year earlier.
Job losses spread across most industries
Employment fell across both goods‑ and services‑producing industries, with only a small minority of sectors adding jobs.
Overall, services‑producing industries shed 56,000 jobs (down 0.3 per cent), while goods‑producing industries lost 28,000 positions (down 0.7 per cent), says Statistics Canada.. The largest declines were recorded in:
- Wholesale and retail trade, down 18,000 jobs (0.6 per cent)
- “Other services” — a category that includes personal care, repair and related services — down 14,000 jobs (1.8 per cent)
Only three of 16 major industry groups posted gains, underscoring the breadth of the downturn.
Average hourly wages, however, continued to outpace inflation. On a year‑over‑year basis, wages were up 3.9 per cent in February, rising $1.42 to $37.56. That followed a 3.3‑per‑cent annual increase in January. For employers, that combination of rising labour costs and weakening demand may factor into more cautious hiring plans as the year unfolds.
Quebec and Western provinces lead regional declines
Regionally, employment fell across much of the country, with Quebec and Western Canada seeing outsized losses.
StatCan reports that employment declined in:
- Quebec: down 57,000 jobs (1.2 per cent)
- British Columbia: down 20,000 (0.7 per cent)
- Saskatchewan: down 5,500 (0.9 per cent)
- Manitoba: down 4,000 (0.5 per cent)
Newfoundland and Labrador was a rare bright spot, adding 2,100 jobs (0.8 per cent). Employment was little changed in the remaining provinces.
Despite the mixed picture, the national unemployment rate of 6.7 per cent remains below the recent peak of 7.1 per cent recorded in August and September 2025, and is virtually unchanged from 6.6 per cent a year earlier.
A noisy survey, but a sobering trend
While the February numbers are stark, Bernard cautions that the Labour Force Survey is volatile month to month and needs to be viewed in context.
“2026 has started weak, but it followed a surprisingly strong stretch to end 2025,” he says. “At least some of the recent slip appears to be a direct reversal of that earlier strength.”
Consensus forecasts for the year point to a “soft, but steady” labour market — one where conditions are unlikely to improve dramatically for job seekers, even if the headline figures bounce around.
“Given the monthly noise in the job numbers, a flat broader trend will coincide with downbeat reports, like February’s,” Bernard explains. “The concern now is that looming clouds on the horizon, first from trade, and now geopolitics, start to thunder.”
