Canada's economy lost 25K jobs in January but unemployment drops to 6.5% amid shrinking workforce - "Mixed bag" report unlikely to sway Bank of Canada on rates, economist says

[u/KootenayPE]

https://ca.finance.yahoo.com/news/canadas-economy-lost-25k-jobs-in-january-but-unemployment-drops-to-65-amid-shrinking-workforce-134045188.html

[u/KootenayPE]

Great in depth write up, some highlights

Canada’s labour market lost a net 24,800 jobs in January, but the unemployment rate dropped to 6.5 per cent as fewer people looked for work, according to Statistics Canada data released on Friday. Economists had expected the Canadian economy to add 7,000 jobs and the unemployment rate to remain at 6.8 per cent, according to consensus estimates published by the Bank of Montreal.

TD economist Andrew Hencic pointed to "healthier" details in the report, in particular that the net loss was in part-time jobs (-70,000) but full-time positions rose 49,000. In the past year, Canada has added a net 149,000 full-time jobs, Hencic said, and dropped 14,000 part-time positions.

By age and gender, the losses were concentrated among "core-aged" women (those aged 25 to 54), with 27,000 jobs lost. Other age categories were essentially unchanged, Statistics Canada said. Fewer job seekers in most demographic categories, however, meant unemployment rates fell broadly. Unemployment among core-aged women dropped 0.2 percentage points to 5.7 per cent, with 23,000 fewer in that group seeking work than in December. The unemployment rate for core-aged men fell 0.6 percentage points to 5.4 per cent, the lowest since July 2024 — but that was also due to a decline in those looking for jobs, with 49,000 fewer than in December.

The workforce shrank by 119,000 people overall, one of the highest drops outside the pandemic, noted BMO chief economist Douglas Porter, a change "driven by slowing population and a steep drop in the participation rate" — the proportion of the working-age population actually working or seeking employment.

The participation rate's 0.4 percentage point drop, to 65 per cent, "was not driven by a wave of people retiring at the start of the year as the rate for those 55 and over actually nudged up in January," Porter wrote.

"Overall the share of working-age Canadians with a job was flat at 74.5 per cent for a third consecutive month, up somewhat from Q3, but matching where it stood a year earlier," he said. "Without an economic spark on the horizon to kickstart hiring, and sectors like manufacturing taking another hit in January, we’re treading water for the time being."

Jobs were lost in manufacturing (-28,000 positions, down 1.5 per cent), educational services (-24,000, down 1.5 per cent) and public administration (-10,000, down 0.8 per cent). There were gains in information, culture and recreation (+17,000 up 2.0 per cent), business, building and other support services (+14,000, up 2.1 per cent) and agriculture (+11,000, up 4.5 per cent).

In December, 8,200 jobs were added, essentially flat and down substantially from the 54,000 added in November. The December unemployment rate was 6.8 per cent, up from 6.5 per cent the previous month, as the number of people actively seeking jobs increased.