By Robb M. Stewart
OTTAWA--Canada's job market has had a dismal start to the year, with employers shedding jobs two months running to buoy an unemployment rate that had been heading lower.
A net 83,900 jobs were lost last month, the most since the first month of 2009 outside of the height of the global pandemic, Statistics Canada said Friday.
That was much weaker than slight 10,000 gain in employment economists were expecting, and with more people searching for work the jobless rate pushed up 0.2 percentage point to 6.7%.
The weakness brings the drop in employment to almost 109,000 already in 2026, rolling back a large chunk of the surge in hiring last fall when the labor market was showing signs of recovery after the uncertainty faced earlier last year from the shift in U.S. trade policy and introduction of tariffs. It also adds to evidence of a weak backdrop for Canada's economy ahead of the Bank of Canada's monetary policy meeting Wednesday.
"No sense sugar-coating this one, this is simply a brutal result," said Douglas Porter, chief economist at Bank of Montreal Capital Markets. "As much as it would be nice to say there were some mitigating results, the report was weak almost from head to toe."
Full-time work accounted for all of February's employment decline, with a drop of 108,400 jobs more than offsetting the addition of 24,500 part-time positions. Losses also were largely in the private sector, while employment in the public sector and among the self-employment was little changed.
Weakness was broad across sectors, extending beyond trade-exposed industries including manufacturing that have been hit hard by the fallout from U.S. tariffs. And hours worked also were down, dropping 1.1%, the steepest fall since early 2022.
Markets in Canada had been pricing in the potential for the Bank of Canada to lift interest rates before year-end, taking policymakers off the fence after leaving rates steady twice in a row. The jobs data, and recent indicators showing manufacturing and wholesale sales volumes and exports all pulled back to start the year, likely will cool hawkishness.
Most economists say that despite the threat of higher energy costs for Canadians with the recent surge in oil prices, the central bank will likely be reluctant to consider rate increases near term.
Only sluggish growth is expected from Canada's economy this year ahead of the renegotiation of the North American free trade pact and after the federal government curbed once-booming immigration. The central bank has projected the economy will grow 1.8% annualized in the first quarter and a soft 1.1% over 2026, following a contraction in the final quarter of 2025.
With Canada's population only rising marginally so far this year, the labor force shrank by 27,200 during February after a 119,000 fall to start the year. The participation rate--the proportion of the working-age population who were either employed or unemployed--dipped 0.1 point to 64.9% in the latest month.
If there is a positive in the jobs numbers, economists say it is that the downward trend in the jobless rate is intact for now. While up, the unemployment rate is still just below December's 6.8% and down from the recent high of 7.1% logged last August and September. And severe winter weather this year may have added to weakness in the job market.
Brendon Bernard, senior economist at jobs site Indeed, said that at least some of the recent market weakness appears to be a reversal of the strength seen toward the end of last year. "Projections for the Canadian economy in 2026 have pointed to a soft, but steady labor market, one where it's tough to expect the weak market for job seekers to turn around. The concern now is that looming clouds on the horizon, first from trade and now geopolitics, start to thunder," he said.
Write to Robb M. Stewart robb.stewart@wsj.com
(END) Dow Jones Newswires
03-13-26 1209ET
