Canada's labour market at a standstill in February, with unemployment unchanged, few jobs added

Canada's unemployment rate was unchanged in February, holding steady at 6.6 per cent, Statistics Canada said Friday, as population growth loses steam and tariff uncertainty shakes the labour market.

Population growth has slowed considerably over the last 12 months. The number of Canadian adults grew at its slowest pace since April 2022 in February, adding 47,000 people compared to 97,000 a year earlier.

The economy also added few jobs from the previous month — just 1,100, much lower than the 20,000 expected — "in what could be the first crack in the Canadian economy caused by tariff uncertainty," wrote CIBC senior economist Andrew Grantham in a note.

Other experts said it was too early to know whether the trade war led to a stall in hiring.

"The labour market's mini hot streak cooled in February, though it's unlikely the pause in job growth was directly linked to the trade war's shock waves," wrote Brendon Bernard, senior economist at Indeed. 

This week's tariff whiplash — the 25 per cent levy on Canadian goods briefly came into effect on Tuesday but was paused on some goods yesterday until April 2 — could show itself more clearly in next month's numbers.

"We'll have to wait another month to see if the new era facing the Canadian economy is becoming evident in the job numbers," Bernard said.

Bank of Canada makes interest rate decision next week

The small employment gains were led by growth in wholesale and retail trade, and in the finance, insurance, real estate, rental and leasing sectors.

Meanwhile, jobs declined in professional, scientific and technical services, and there were losses in sectors vulnerable to tariffs, like transportation and warehousing, and manufacturing.

Average hourly wages rose 3.8 per cent on a yearly basis in February, after rising to 3.5 per cent in January.

The snowstorms that swept across much of the country last month also led to a decline in the total amount of hours worked, falling 1.3 per cent from the previous month — the largest decrease since April 2022, Statistics Canada said.

A total of 429,000 employees lost work hours due to the weather for part of the week between Feb. 9 and 15, not seasonally adjusted, according to the data agency.

Youth unemployment, which trended upwards for much of 2023 and 2024, fell to 12.9 per cent in February after a similar decline in January. The number of unemployed young people looking for jobs fell by 9.3 per cent over those two months.

The Bank of Canada's next interest rate meeting is on Wednesday, and economists largely expect that the central bank will cut the rate by 25 per cent against the backdrop of the on-again, off-again trade war. 

"While the Bank of Canada can't solve the tariff issue with lower interest rates, it can help the economy transition towards other growth drivers," wrote Grantham. 

"As a result we continue to forecast a 25 [basis point] cut next week and further reductions to follow should tariff and economic uncertainty persist."