‘Bizarre’ labour data tests Bank of Canada’s resolve but keeps rate path on hold
Canada’s latest jobs report has top economists calling it “bizarre,” “mixed,” and “not normal” – and many say it still leaves the Bank of Canada on hold.
According to the Financial Post, David Rosenberg of Rosenberg Research & Associates Inc. called the January data “a completely bizarre piece of data” and said “the report was littered with internal contradictions.”
He focused less on headline job counts and more on slowing wage growth, arguing that weaker pay gains show slack in the labour market and are “among the most important components of this report as far as the Bank of Canada is concerned.”
Douglas Porter, chief economist at Bank of Montreal, described the release as “not normal” because unemployment fell while employment also declined.
He called it a “mixed bag” of soft and firm signals.
CBC News said Porter framed the key question as whether this is “bad news” because of job losses and manufacturing weakness, or “good news” because of a bigger drop in the unemployment rate and a rise in hours worked; he answered that it is “both, though leaning bad.”
Porter sees the data as part of a broader adjustment to three forces: US tariffs that have debilitated Canada’s manufacturing sector, an “abrupt slowdown” in population growth and a rising 65-plus population.
He wrote that these demographic shifts likely mean “the equilibrium, or natural, unemployment rate is probably drifting lower,” so the cooling in jobs and hours worked would normally push the Bank of Canada toward easier policy.
But Porter also noted that governor Tiff Macklem has signalled it will take a lot to move off the current stance and that “this mixed and weather-affected report will not qualify.”
Other forecasters share the view that the report is confusing, but not decisive for monetary policy.
Reuters said Andrew Hencic, senior economist at TD Economics, argued that one report is unlikely to “move the needle” for the Bank of Canada and that the unemployment rate suggests the labour market is “better than expected – but not necessarily tight.”
Yahoo Finance reported that Hencic sees some “healthier” details under the surface but still expects the Bank to stay content to “watch things play out.”
CBC News said Andrew Grantham, senior economist at CIBC Capital Markets, also called the release “very much a mixed bag, with both employment and unemployment apparently declining in the same month.”
He told clients he does not expect it to have much impact at the Bank of Canada and sees rates on hold for the rest of the year.
Several analysts stress structural labour-supply shifts rather than an overheated jobs market.
The Financial Post reported that Tony Stillo of Oxford Economics said “more job losses are likely in the cards for (the first half of) 2026” along with “modest layoffs,” and that a shrinking labour supply is putting downward pressure on the unemployment rate.
He added that “like the Bank of Canada, we also think there’s still slack in the labour market, and today’s soft employment report helps solidify that view.”
BNN Bloomberg reported that Desjardins economist Kari Norman called the survey a “bit of a U-turn” after months of steady job gains and linked the shrinking labour pool to reduced immigration.
Capital Economics’ Bradley Saunders, who said the sharp drop in the labour force reflects “collapsing population growth,” meaning fewer jobs are needed each month to keep the jobless rate steady and that he expects further declines in unemployment.
Norman told BNN Bloomberg that this backdrop is consistent with a tougher job market for younger workers and that many firms may wait for clarity from the upcoming Canada–US–Mexico trade agreement review before making major hiring decisions.
On policy, Norman said Bank of Canada governors have “made it really clear that they don’t intend to make any changes anytime soon to the policy rates, unless there’s something that comes up that’s different than what they expect.”
She added that she does not expect today’s weaker jobs numbers to change that stance at the next meeting.
Hencic similarly sees little in the report to “move the needle” for the central bank.
