Canada’s labour market slowed to close out 2025, with employment rising by just 8,200 in December and the unemployment rate ticking up to 6.8 per cent as more people looked for work. The size of the labour pool is challenging to understand: the adult population increased by only 9,900, meaning a large share of employment gains came from people re-entering the workforce rather than population growth alone.
This shift comes amid tighter immigration policy, which may complicate Statistics Canada’s seasonal adjustments to employment data. Nevertheless, the notable easing in labour market conditions after three months of strong momentum suggests the economy is slowing heading into 2026.
While the employment gain was modest, it exceeded the consensus forecast, which had expected a decline. Growth in full-time employment (+50,000) offset losses in part-time work, but total hours worked declined. The participation rate jumped from 65.1 to 65.4 per cent, more than reversing November’s 0.2-point drop, suggesting some volatility due to sampling or seasonal adjustment issues in the data.
| Employment | Employment Type | m/m | ||
| Province | m/m | Full-time | 50.2k | |
| Quebec | +15.5k | Part-time | -42.0k | |
| Ontario | +12.7k | Public sector | +1.3k | |
| Manitoba | +2.2k | Private sector | +1.3k | |
| PEI | +0.8k | Self-employed | -0.5k | |
| Nova Scotia | +0.3k | |||
| Newfoundland | -0.2k | |||
| New Brunswick | -2.3k | |||
| British Columbia | -3.3k | |||
| Saskatchewan | -4.0k | |||
| Alberta | -13.7k | |||
Source: Statistics Canada
At an industry level, the numbers were mixed. The construction sector saw notable gains, supported by elevated housing activity outside of BC and Ontario. Services employment was largely flat, with strong growth in healthcare and social assistance (+20,800) offset by a decline in professional, technical, and scientific services (-18,100). Finance, insurance, and real estate fell (-10,200), while other private services increased significantly, suggesting gains among self-employed small businesses.
Regionally, Alberta reported the sharpest employment decline (-0.5 per cent), while Ontario (+0.2 per cent) and Quebec (+0.3 per cent) saw modest gains. Ontario’s manufacturing sector contributed to its growth, though the province still has the highest unemployment rate in the country (7.9 per cent) outside of Newfoundland (10.7 per cent).
After six months of massive swings — mostly on the upside — this report seems more in line with broader economic trends. Previous outsized employment gains and a steep decline in the unemployment rate in the fall were inconsistent with underlying conditions. December’s data lifts the jobless rate slightly above year-ago levels and shows job gains and hours worked at more realistic levels.
While this report may temper speculation about a Bank of Canada rate increase, it does not change our view that the Bank is likely to remain on hold for some time amid continued trade uncertainty.
Housing Affordability Watch
CMI monitors the latest developments and offers insights on solutions to Canada’s housing affordability crisis
Where did starter homes go?
The modest, family-friendly homes that were once everywhere in Canada’s cities have all but disappeared. Today’s first-time buyers often face choices that are either impractical for raising a family or, if suitable, unaffordable.
In the first Housing Affordability Watch of 2026, we explore the factors that shaped today’s housing stock – and what needs to change to help aspiring buyers find a foothold in the market.
Read it here: Where Did the Starter Home Go?
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