Canada’s January Unemployment Rate Drops to 6.5%
The Canadian employment scene displayed contrasting trends in January 2024. While the economy lost 25,000 jobs, the unemployment rate decreased to 6.5%. This marks the lowest jobless rate since September 2024, according to Statistics Canada.
Unemployment Rate and Labour Market Dynamics
The drop in the unemployment rate is attributed to a decrease in the number of individuals actively seeking employment. The labour force participation rate has also declined, now sitting at 65%. Interestingly, there has been an increase in the number of people not classified as either employed or unemployed in January.
Manufacturing was heavily impacted, contributing the majority to the job losses. This sector has been struggling due to U.S. tariffs imposed over the past ten months. Employment in educational services and public administration also dwindled during this period.
Expert Insights on Employment Data
Douglas Porter, chief economist at BMO, commented on the mixed signals from the latest report. He noted that the scenario reflects an economy adjusting to three key factors: U.S. tariffs affecting manufacturing, a sudden slowdown in population growth, and an increase in the population aged 65 and older. He remarked, “Both good and bad news is present, though leaning towards the negative.”
Despite the mixed data, Porter indicated that the Bank of Canada is likely to remain persistent in its current interest rate policy, unaffected by these fluctuations.
Job Figures Across Sectors
Job losses in January were predominantly from part-time roles, which fell by 1.8%. However, a slight increase in full-time employment helped balance these losses. The private sector faced a decline of 52,000 jobs, offsetting gains from the last quarter of 2023, while changes in public sector employment were minimal.
Regional Employment Changes
- Ontario saw a loss of 67,000 jobs, primarily in manufacturing.
- Alberta gained 20,000 jobs.
- Saskatchewan added 6,100 jobs.
- Newfoundland and Labrador saw an increase of 3,800 jobs.
Wage Statistics
On a positive note, average hourly wages increased by 3.3%, which translates to a rise of $1.18, bringing the total to $37.17 per hour compared to January 2023.
In summary, January’s employment report reveals a complex picture. Both employment and unemployment figures fluctuated within the same month. CIBC Capital Markets’ senior economist, Andrew Grantham, expressed skepticism that the latest data would impact the Bank of Canada’s forthcoming decisions, maintaining that interest rates would likely remain steady throughout the year.
