Canada’s economy lost 84,000 jobs in February while the unemployment rate edged up to 6.7 per cent, Statistics Canada said on Friday, a setback for the labour market and one of the worst monthly job losses seen in years outside of the pandemic.
The decline in employment was largely driven by a drop in full-time and private sector jobs, the latter offsetting a short period of growth seen earlier in the fall. Jobs fell among men in the core working-age group of 25 to 54, and among young people between the ages of 15 and 24.
Jobs mostly declined in the goods and services-producing industries, with 18,000 jobs lost in wholesale and retail trade, 12,000 lost in construction and 9,200 lost in manufacturing.
Several indicators were more or less unchanged from the same time last year, including the unemployment rate (which sat at 6.6 per cent in Feb. 2025), the employment rate and the number of people working full-time or part-time.
Katherine Judge, an executive director and senior economist at CIBC Capital Markets, said the labour market took a “worrisome turn” in February.
The drop in jobs and the uptick in unemployment was in contrast to analyst expectations that the labour market would gain 10,000 jobs, she wrote, and that the unemployment rate would rise at a slower pace than it did.
“This is clearly a very worrisome report for the [Bank of Canada] that shows that labour market slack has increased and activity is frozen amidst trade uncertainty,” said Judge.
Average hourly wages rose 3.9 per cent, or $1.42, for a total of $37.56 an hour compared to the same period last year.
The participation rate (that is, the number of people who had a job or were looking for one), fell by 0.1 percentage points to 64.9 per cent in February, according to the data agency.
The youth unemployment rate for people aged 15 to 24 ticked up to 14.1 per cent last month, with Statistics Canada noting that the jobless rates for racialized youth were “notably higher” compared with non-racialized, non-Indigenous youth.
Douglas Porter, chief economist at Bank of Montreal, said the report was weak “almost from head to toe,” calling February’s figures “brutal.”
“No sense sugar-coating this one … the near absence of net job growth in the past year is perhaps the most telling reading here,” Porter wrote in his note to clients.
“While a tough winter may have exaggerated the weakness at the start of the year, and a shrinking labor force is also weighing heavily on headline employment, the underlying story so far in 2026 is one of weakness.”
If the report is any indication of underlying economic weakness, further interest rate cuts by the Bank of Canada are almost certainly off the table, Porter wrote.
