Preview: Due March 13 - Canada February Employment - Employment and Labor force due for a rebound in Ontario
We expect Canadian employment to increase by 50k in February, more than fully reversing a 24.8k decline in January to keep trend modestly positive. However we expect an even stronger rebound in the labor force from a decline in January to lift the unemployment rate to 6.6% from 6.5%, while remaining below December’s 6.8%.
January’s 24.8k decline in employment was more than fully explained by a 66.5k decline in Ontario. January also saw a fall of 119k in the labor force, which was more than fully explained by a decline of 136k in Ontario. That January’s slippage was more than fully explained by Ontario hints at temporary factors, probably weather, which will be corrected in February, though there are risks of continued negative weather distortions in February.
We expect February’s employment gain to come fully in part time work, correcting from two straight declines, while full time work pauses after two straight strong gains. Job gains are likely to be led by components that slipped in January, notably manufacturing, education and retail/wholesale.
We expect February’s labor force to increase by 100k, which would lift the unemployment rate to 6.6% from 6.5%, though before rounding the rue would be close to 0.2%, to almost 6.65% from 6.46%. The participation rate would rise to 65.3% from 65.0%. We expect the average hourly wage of permanent employees to correct higher to 3.5% yr/yr from 3.3% in January, still below December’s 3.7%.
While GDP declined in Q4 the Canadian economy appears to have some underlying momentum entering 2026. Unemployment appears to be moving off a peak of 7.1% seen in August and September of 2025, though there is some way to go before the labor market slack is absorbed.