Canadian Job Growth Stalls in February.

Weak Canadian Job Creation Opens The Way For BoC Easing Next Week

Today’s Labour Force Survey for February was weaker than expected, showing de minimis job growth last month. Employment held steady in February (+1,100; +0.0%), following three consecutive monthly increases totalling 211,000 (+1.0%) in November, December and January. On a year-over-year basis, employment was up by 387,000 (+1.9%) in February.

The employment rate—the proportion of the population aged 15 and older who are employed—was unchanged at 61.1% in February. This follows three consecutive months of increases. The employment rate had previously fallen 1.7 percentage points from April 2023 to October 2024, as employment growth was outpaced by population growth.

The number of private sector employees was little changed in February, following increases in December (+39,000; +0.3%) and January (+57,000; +0.4%). Public sector employment and self-employment were also little changed in February.

Total actual hours worked fell 1.3% in February—the most significant monthly decline since April 2022. On a year-over-year basis, total hours worked were up 0.5% in February 2025.

Notable winter storms buried parts of Central and Eastern Canada in snow throughout the LFS reference week of February 9 to February 15. 429,000 employees lost work hours due to the weather for part of the week (not seasonally adjusted). This was more than four times higher than the average number of employees who lost work hours due to weather in February over the previous five years (96,000).

The unemployment rate was unchanged at 6.6% in February, following decreases in December (-0.2 percentage points) and January (-0.1 percentage points). The unemployment rate had previously trended up, rising from 5.0% in March 2023 to reach a recent high of 6.9% in November 2024.

In February, the unemployment rate for core-aged women declined 0.2 percentage points to 5.4%. For core-aged men, the rate rose 0.3 percentage points to 5.9%, driven by an increase in job seekers.

Among youth, the unemployment rate fell 0.7 percentage points to 12.9% in February, following a similar-sized decline in January (-0.6 percentage points). Over these two months, the number of young unemployed job searchers fell by 41,000 (-9.3%), while youth employment rose by 22,000 (+0.8%). The youth unemployment rate had previously touched a 12-year high (excluding 2020 and 2021, during the COVID-19 pandemic) of 14.2% in August and December 2024, following a strong upward trend throughout most of 2023 and 2024.

In February, wholesale and retail trade employment increased (+51,000; +1.7%). Employment in this industry has increased in recent months, rising 107,000 (+3.7%) from a recent low point in July 2024 and offsetting declines in the first half of 2024. Compared with 12 months earlier, the number of people working in the industry changed little.

More people worked in finance, insurance, real estate, rental and leasing (+16,000; +1.1%) in February, the second increase in three months. On a year-over-year basis, employment in the industry was up by 60,000 (+4.3%).

Employment gains led by wholesale and retail trade offset by declines in other industries

In contrast, employment fell in February in professional, scientific and technical services (-33,000; -1.6%). Employment growth in this industry has been subdued in recent months, following a strong upward trend from July 2023 to November 2024.

Employment also fell in transportation and warehousing (-23,000; -2.1%) in February, following gains of 17,000 in December and 13,000 in January. On a year-over-year basis, employment in the industry was down by 29,000 (-2.6%).

Total hours worked fell 1.3% in the month, but were up 0.5% compared with 12 months earlier.

Average hourly wages among employees were up 3.8% (+$1.32 to $36.14) on a year-over-year basis in February, following growth of 3.5% in January (not seasonally adjusted).

Bottom Line

With a combination of emerging weakness and US President Donald Trump’s on-again, off-again tariff approach still casting a cloud of uncertainty over the Canadian economy and its ability to trade with its biggest customer, the Bank of Canada is expected to cut its policy rate for the seventh straight meeting on March 12.

The loonie briefly dipped to the day’s low against the US dollar and traded at $1.4337 as of 8:35 a.m. in Ottawa after the concurrent release of similarly soft US jobs figures. Canada’s two-year yield slipped around three basis points to 2.60%, tracking a broader move lower in developed market yields.

Today’s reports for Canada and the UF are the latest evidence that North American labour markets are softening, with more people permanently out of work, fewer workers on federal government payrolls and a jump in those working part-time for economic reasons. The number of Americans holding multiple jobs climbed to nearly 8.9 million.

That sets a weak backdrop just as President Donald Trump’s policies raise concerns about the broader economy. Inflation has proven sticky in the US in recent months and consumers are starting to pull back on spending, which, if sustained, may lead businesses to rethink their hiring plans.

Following the releases, overnight swaps traders increased their bets that the Bank of Canada would trim borrowing costs by another 25 basis points next week, boosting the odds to 85% from about three-quarters previously.

This is the first jobs report that fully reflects Trump’s second term, and the administration’s actions to shrink the government workforce have already contributed to the most job-cut announcements since early in the pandemic, according to separate data out Thursday. Some economists say the US could lose over half a million jobs by the end of the year because of the federal job cuts and their spillover effects to the broader economy. Trump is also deploying tariffs to bring manufacturing jobs back to the US, and that’s already incentivizing some companies like Apple and HP to consider investing more domestically. Conversely, aluminum producer Alcoa Corp. has warned that the levies could result in 100,000 job losses.

Canada and the US are restricting immigration or sending migrants home, which will constrain a significant source of job growth in recent years.