Canada’s complete employment rose by 76,000 jobs to start out off 2025, following a acquire of 91,000 in December. This marks the second consecutive month of no less than a 0.4% enhance in employment month-over-month.
The spike caught many economists off guard, with RBC economists anticipating solely a modest enhance of 15,000 jobs, whereas Scotiabank’s Derek Holt had projected a spread of 15,000 to 76,000.
Bond yields rose to 2.75, up by 0.12, or 4.63%, whereas the Canadian greenback appreciated in response to the better-than-expected knowledge.
In keeping with Statistics Canada, the nation’s unemployment charge ticked down by 0.1% to six.6%, whereas the labour drive participation charge surged to 65.5%, up from 65.1%.
“Three consecutive months of stable job progress suggests the cyclical enhance to Canada’s economic system from decrease rates of interest is clearly taking impact,” writes TD Economics’ Leslie Preston in a analysis be aware.
Of the positive factors, 35,200 have been full-time positions, Statistics Canada reported. Moreover, complete hours labored noticed a wholesome enhance of 0.9% month-over-month.
Canada’s youth aged 15 to 24 noticed a robust enhance in employment, with 31,000 extra jobs added, a 1.1% enhance. In keeping with Statistics Canada, the youth employment charge additionally rose by 0.6 proportion factors to 54.5% in January, the primary enhance since April 2024.
The sectors main job progress final month included manufacturing (+33,000 jobs), skilled, scientific and technical companies (+22,000 jobs), building (+19,000 jobs), and lodging and meals companies (+15,000 jobs).
Commerce struggle issues overshadow sturdy job progress
Whereas the rise in employment is critical, economists warning that the potential risk of a commerce struggle casts a shadow over the optimistic information.
“If we weren’t all absorbed with the potential for a commerce struggle, we might be speaking concerning the comeback within the Canadian home economic system in current months,” writes BMO economist Douglas Porter.
In its launch, Statistics Canada highlighted that the manufacturing sector, which added 33,000 jobs this month, represents 8.9% of complete employment within the nation. This makes it “significantly inclined to modifications in tariffs and overseas demand,” the company famous.
Statistics Canada additionally famous that roughly 641,000 manufacturing jobs, or 39.4% of the sector, depend upon U.S. demand for exports from Canada.
Commerce dangers preserve charge cuts alive
TD‘s Preston notes that Financial institution of Canada rates of interest are actually low sufficient that they’re now not a drag on the economic system.
“Now it’s over to Canadian governments to do what they will to enhance the competitiveness of the economic system within the face of the tariff risk,” she wrote.
BMO’s Porter echoes the priority. “Alas, we nonetheless must take care of the lingering uncertainty on the commerce entrance, which casts a cloud over these sunny jobs figures,” he wrote. “For the Financial institution of Canada, there’s little right here crying out for additional near-term charge aid, however the clear and current commerce dangers will preserve rate-cut hopes alive.”
Job numbers south of the border within the U.S. additionally noticed a rise, although barely under expectations. Whole non-farm payroll employment rose by 143,000 in January, slightly below the anticipated 170,000 new jobs.
In consequence, the U.S. unemployment charge edged right down to 4.0%, its lowest stage in eight months.
TD Economics’ Thomas Feltmate sees the most recent numbers as signalling that “hiring momentum was even stronger than beforehand anticipated on the finish of final 12 months,” averaging 204k jobs per-month within the fourth quarter.
Nonetheless, like Canada, tariff threats stay a key issue influencing coverage choices within the U.S., particularly with inflation progress stalling in current months and heightened uncertainties about how far the brand new administration will go together with the commerce struggle.
“With inflation progress having stalled in current months and heightened uncertainties on how far the brand new administration will go on tariffs, the Fed is more likely to stay extra cautious on charge cuts and maintain the coverage charge regular till someday this summer season,” he wrote.
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Final modified: February 7, 2025