CANADA: April Labour Force Survey Preview: Flatlining On Supply And Demand (1/2)

The April Labour Force Survey report is expected to see relatively steady dynamics compared with March, with consensus expecting 10k employment gains (14.1k prior) with the unemployment rate remaining at 6.7%. This would represent continued stability for a second month following an 109k employment drop in January-February. However, it would keep the level of employment below that seen 6 months earlier, reflecting both supply-side constraints on demographics and immigration issues, as well as subdued demand amid continued trade-related (and now, war) uncertainty. Indeed, analysts' outlook for April suggests that the US-Iran conflict and the energy-related fallout won't have much effect if any so far.

• At April's meeting, the Bank of Canada described recent labour market dynamics with: "The labour market is soft, with subdued employment growth over the past year and job losses in sectors targeted by US tariffs. The unemployment rate remains in the 6½%‑7% range, reflecting both weak hiring and fewer job seekers." The structural picture is fleshed out a little more in the latest Monetary Policy Report which eyes weak supply dynamics over the medium-term: "Trend labour input is flat over the projection horizon, reflecting modest population growth and population aging. Population growth remains subdued due to low immigration targets and measures to reduce the number of non‑permanent residents. Population aging results in a modest decline in the trend labour force participation rate."
• If consensus is correct there will be little reason for the BOC to reconsider either narrative, leaving employment gains up 0.4% Y/Y with the 6-month average monthly employment change at a very static -4k. Economists' forecasts per Bloomberg suggest an expectation for the unemployment rate to fall to 6.5% by year-end and 6.2% by Q3 2027, with GDP picking up and the BOC hiking against that backdrop, though this trajectory is also likely to incorporate continued weakness in labour force supply.
• March's 14.1k employment gains and unemployment rate unchanged at 6.7% were almost exactly as expected, and overall the deterioration at the start of the year appeared to have abated to some degree. The number of unemployed rose by just 1k, and while the participation did edge up as was widely expected, it basically just held steady (64.95% vs 64.92% prior), while the employment-to-population ratio was unchanged at 60.6%. However, with the main readings as static and expected as they were, this still failed to constitute anything like an impressive rebound from February's historic labor market rout (-84k), with the cumulative sum of the drop in employment in 2026 merely pared from 109k to 95k. Structural headwinds remained: the labor force grew for just the 2nd month in the last 5, but by just 15k, and is still down 68k since last October, with immigration restrictions continuing to weigh.
• Closely eyed in April will be whether there is any spreading of weakness from trade disrupted industries to the broader economy. Goods-producing sector employment saw the best gains in March since September 2025, rising by 13k, in the first monthly rise of the year. That wasn't nearly enough though to offset the -32k in the prior two months, with the level remaining below levels seen as far back as three years ago. In Services-producing sectors, there were mixed results, but with just 2k in gains overall that means 2026 has seen a net -76k employment change.