Wage growth cools as unemployment hits 6.8%, signalling more slack in Canada’s labour market
More Canadians looked for work in December and pushed the unemployment rate up to 6.8 percent even though the economy added only 8,200 jobs, pointing to a labour market with clear slack and easing wage pressure, according to Statistics Canada.
Employment was essentially flat and the employment rate held at 60.9 percent, but the number of unemployed rose by about 73,000 to 1.6m as more people entered the labour force. The participation rate edged up 0.3 percentage points to 65.4 percent.
CBC News noted that this followed three months of outsized gains that added 181,000 jobs from September through November after almost no change in the first eight months of 2025, when US tariffs and trade uncertainty choked hiring.
Average hourly wages for employees rose 3.4 percent year over year in December, or $1.23 to $37.06, down from 3.6 percent in November, according to Statistics Canada.
Reuters said the average hourly wage for permanent employees, a gauge closely watched by the Bank of Canada, increased 3.7 percent in December, easing from 4.0 percent in November.
The composition of work continued to shift toward more stable roles.
Full‑time employment increased by 50,000 (+0.3 percent) in December, while part‑time employment fell by 42,000 (-1.1 percent), Statistics Canada reported.
CBC News said December’s net job gains came entirely in full‑time work, while Reuters also highlighted a 50,200 rise in full‑time positions alongside a 42,000 drop in part‑time roles.
Over the 12 months to December 2025, part‑time employment still grew faster (+2.6 percent; +99,000) than full‑time employment (+0.7 percent; +128,000), according to Statistics Canada.
Sector results were uneven.
Statistics Canada reported that employment increased in health care and social assistance (+21,000; +0.7 percent) and in “other services” such as personal and repair services (+15,000; +2.0 percent), while employment fell in professional, scientific and technical services (-18,000; -0.9 percent), accommodation and food services (-12,000; -1.0 percent), and utilities (-5,300; -3.0 percent).
CBC News said health care and social assistance added 21,000 jobs and that professional, scientific and technical services lost about 18,000 positions, the first decline in that sector since August.
Reuters similarly reported a gain of 20,800 in health care and social assistance and a drop of 18,100 in professional, scientific and technical services.
CBC News added that the goods‑producing sector gained 8,000 jobs, largely in construction, while the services sector was up by a net 100 positions, led by health care, social assistance and other services.
The age profile of the labour market showed a split that matters for long‑term workforce planning.
Statistics Canada said employment increased by 33,000 (+0.8 percent) among people aged 55 and older but fell by 27,000 (-1.0 percent) among youth aged 15 to 24.
The youth unemployment rate rose 0.5 percentage points to 13.3 percent in December, even after earlier gains in October and November when youth employment climbed by 70,000 (+2.6 percent) and the youth jobless rate fell 1.9 percentage points, according to Statistics Canada.
CBC News noted that despite the December increase, youth unemployment at 13.3 percent was down from 14.7 percent in September, which it described as a 15‑year high outside the COVID‑19 pandemic.
Regionally, Statistics Canada reported that employment grew in Quebec (+16,000; +0.3 percent) and fell in Alberta (-14,000; -0.5 percent) and Saskatchewan (-4,000; -0.6 percent), with little change in the other provinces.
Bloomberg also reported that Quebec led job gains in December while Alberta and Saskatchewan shed jobs.
Economists generally saw the data as confirmation that slack remains in the labour market rather than a sharp downturn.
Reuters quoted CIBC Capital Markets senior economist Andrew Grantham saying that “with more people once again looking for work, today’s unemployment rate suggests that plenty of slack remains in the labor market.”
CBC News cited BMO chief economist Douglas Porter as saying that the December figures bring job gains back to a more “realistic place.”
He added that, “following massive swings in the prior six months (mostly on the strong side of the ledger), today’s ho-hum report likely has a better grasp on reality.” Porter also said the numbers are unlikely to matter much for the Bank of Canada’s next interest‑rate call.
On policy, Reuters reported that the Bank of Canada held its key rate at 2.25 percent on December 10 and said this was “about the right level” to keep inflation near its 2 percent target, while money markets expect rates to stay on hold for the rest of the year.
Bloomberg said traders in overnight swaps see the central bank keeping its key rate at 2.25 percent for most of 2026, with the next rate decision and monetary policy report due January 28.
Bloomberg quoted Servus Credit Union chief economist Charles St‑Arnaud saying the report shows “some resilience in the labour market” and “will allow for a pick up, albeit modest, in economic activity in 2026,” supporting the view that there is no need for further rate cuts unless the economy deteriorates.
Reuters added that Desjardins macro strategy head Royce Mendes noted that while hiring was soft and the unemployment rate rose, the survey was “not weak enough to alter expectations for the Bank of Canada.”
TD senior economist Andrew Hencic likewise said in a note to investors that “the Canadian labour market gave back some of its gains in December,” and that in a noisy data series this outcome “remains in line with our view that the labour market is not yet out of the woods,” according to Bloomberg.
Looking back over the year, Statistics Canada said US tariffs and trade uncertainty weighed on hiring for much of 2025, but conditions improved for job seekers toward year‑end.
Bloomberg reported that tariffs on steel, aluminium, autos and lumber have hit key industries and that broader trade uncertainty continues to chill hiring, even as some sectors—especially health care and social assistance—remain important drivers of job growth.
