Preview: Due April 10 - Canada March Employment - Highly volatile, but trend still looks modestly positive
We expect Canadian employment to increase by 40k in March, in a correction from an exceptionally large decline of 83.9k in February which may have been influenced by weather. While the data has been very volatile, underlying trend is probably still moderately positive. We expect an unemployment rate of 6.6%, down from 6.7% in February but above January’s 6.5%.
Employment data from the last nine months have seen four increases in excess of 50k, and two declines, two in excess of 50k and two slightly steeper than 20k. Only one month, a 10.1k increase in December, came in close to February’s 6-month average of 13.5k, which is probably a reasonable estimate of trend. A separate monthly payroll survey, for which data is available only to January, has a 6-month average of 9.2k, though this was lifted by a 45.6k increase in January, a month when the employment report saw a 24.8k decline.
February’s steep decline in employment was thus a second straight drop, but weather may have been a factor in both and March saw unusually mild weather. The last time we saw two straight declines, July and August of 2025, four straight positives followed, with the first three of them exceeding 50k. We expect March’s increase to be concentrated in private sector services, and full time work. We expect goods employment to be unchanged and a modest 5k increase in the public sector.
We expect a 25k increase in the labor force after two straight declines, though this would still see the 6-month average turning negative for the first time since June 2021. This would see unemployment at 6.64% before rounding, down from 6.71% in February. We expect a participation rate of 65.0%, up from 64.9% in February which was the lowest since January 2021. There remains some slack in the labor market so a falling labor force, as immigration slows, should not be a major barrier to job creation in the near term.
The average hourly wage gain for permanent employees picked up sharply in February to 4.2% yr/yr from 3.3% in January. We expect only a modest correction in March to 4.0%, with subdued year ago date arguing against a deeper correction. March is probably too early to see any adverse impact on employment from higher energy prices. Risks for Canada are two-sided, as Canada’s energy industry will be boosted, but overall the risks to Canadian employment from a protected energy price shock are likely to be negative.