Canada February Employment - A very weak month, though partly corrective from strength in late 2025
Canada’s February employment report is very weak, falling by 83.9k to extend a 24.8k fall in January. The data may in part be corrective from over-inflated stronger in September, October and November of 2025 but there is little in the February breakdown that mitigates the weakness of the headline.
Full time employment, which remained firm in January, fell by 104.8k with part time up by 24.5k. Private sector employment led the decline, falling by 72.6k, with the public sector down by 17.1k and self-employment up by 5.6k. The employment decline was broad based by industry with no component reaching a decline as steep as 20k with wholesale and retail the weakest at -17.9k.
Unemployment increased to 6.7% from 6,.5% with the labor force down by 27.2k. We had suspected both the labor force and employment would bounce in February with January’s declines more than fully explained by Ontario. In February Ontario’s labor force increased by 31k and employment by 3k, not enough to offset increased weakness elsewhere. Despite the weakness of the data, the hourly wage gain for permanent employees bounced to 4.2% from 3.3%. Trend probably remains near the middle of these two figures.
The data is unlikely to p[ush the BoC into easing in its upcoming meeting with unemployment still off its peak of 7.1% seen in August and September of 2025, but raises the risk they will need to again if inflation remains contained (clearly uncertain currently given risks in oil). The 3-month average for employment growth has tuned sharply negative at -32.9k but the 6-monmth average at 13.2k remains positive. Late 2025 strength and early 2026 weakness are both likely to be overstated.
