Statistics Canada reported an increase in job seekers in December, leading to a rise in the unemployment rate to 6.8% from 6.5% the previous month. Only 8,200 new jobs were added in Canada in December, following significant job gains in the preceding three months. During September to November, the economy witnessed a substantial increase of 181,000 jobs after minimal growth in the initial eight months of 2025 due to trade uncertainties.
RBC’s assistant chief economist, Nathan Janzen, viewed the rise in people entering the labor force as a positive development. While the surge in job seekers might elevate the unemployment rate, it indicates improved confidence among Canadians previously inactive in the job market.
The job growth in December primarily favored full-time positions, with an increase of 50,200 jobs, while part-time roles declined by 42,000. Sectors like health care and social assistance saw a rise of 21,000 jobs, whereas the professional and technical services sector experienced a drop of approximately 18,000 positions, marking the first decline since August. Additionally, the manufacturing industry, sensitive to trade fluctuations, added 4,300 jobs in December.
Although job gains were notable for individuals aged 55 and above, youth employment faced challenges, with the unemployment rate for those aged 15 to 24 increasing to 13.3%. Average hourly wages saw a 3.4% year-over-year growth in December, slightly lower than the 3.6% growth in November.
Analysts had anticipated a net job loss of 5,000 positions with a slight increase in the unemployment rate to 6.6%, prior to the release of the data. The labor market felt the impact of U.S. tariffs throughout much of 2025, but conditions improved for job seekers towards the end of the year.
BMO’s chief economist, Douglas Porter, described the December job figures as a return to a more realistic pace of job gains. He suggested that the modest numbers are unlikely to impact the Bank of Canada’s decision on interest rates, supporting his forecast of the bank maintaining its current rates.
The latest jobs report serves as the Bank of Canada’s final assessment of the labor market before its upcoming interest rate decision, following the bank’s decision to keep its policy rate unchanged at 2.25% in the previous month.