MNI: Factories Lead Canada's First Job Decline In Five Months

Canadian hiring fell for the first time in five months in January led by manufacturers suffering under U.S. tariffs, though unemployment still declined as fewer people were looking for work, the federal statistics office reported Friday.

Employment declined by 24,800 on the month versus an MNI economist forecast for a gain of 5,000. Manufacturing employment fell by 27,500 to bring the year over year decline to 2.7%. The overall job decline was split between a gain of 44,900 full-time jobs and a 69,700 drop in part-time work. 

The labor force also posted the biggest decline on record in January excluding the pandemic, down 119,000 after a gain of about 80,000 in December. In percentage terms, the decline was the biggest since 1990 around the time of a severe recession. StatsCan's report noted it's unclear why the labor force declined, but this comes at a time where the population is ageing and people over 55 are less attached to the workforce. The federal government is cutting back on foreign work visas. 

Canada's unemployment rate fell to the lowest since September 2024 at 6.5% from the prior 6.8%, in a month where economists predicted no change. Wages also rose 3.3% from a year ago.

Compared with 12 months earlier, employment was up by about 134,000 or 0.6%, driven by a 149,000 rise in full-time work. 

The report brings the job market's momentum back to weakness many economists predicted at the end of last year, which was instead defied by three months in a row of surprising strength. At the same time, the complex story of shifting supply and demand for workers meshes with the Bank of Canada's view that figuring out cyclical versus structural changes is becoming more difficult amid higher geopolitical risks.

"The unemployment rate fell across most major demographic groups in January, largely reflecting declines in the number of job searchers," Statistics Canada's report said.