Canada’s economy added 76,000 jobs in January as the country braced for the impact of tariffs from U.S. President Donald Trump, marking the third consecutive month of jobs growth.
The unemployment rate fell by 0.1 percentage points last month, bringing Canada’s unemployment rate to 6.6 per cent, with the largest gains (33,000 jobs) coming from the manufacturing sector, Statistics Canada said in its monthly labour force survey.
The U.S. also reported jobs data on Friday. U.S. employers added 143,000 jobs last month, but the unemployment rate fell to four per cent to start 2025.
The latest jobs report comes as Canada faces the threat of Trump’s sweeping tariffs, which economists have warned could lead to mass layoffs, particularly in Canada’s manufacturing sector.
The drop in Canada’s unemployment rate was driven largely by youth aged 15 to 24, whose unemployment rate fell to 13.6 per cent, down from a recent high of 14.2 per cent in August and December 2024.
Average hourly wages across Canada were up 3.5 per cent, or by $1.23 to $35.99, compared with January 2024. That marks a slowdown from annual gains of 4.0 per cent in December.
Since November, Canada has added a total of 211,000 jobs, with increases in both full-time work (147,000 new jobs) and part-time work (64,000 new jobs).
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Ontario led the provinces in employment growth, with 39,000 new positions, while B.C. followed in second place with 23,000 new jobs.
Tariffs loom over Canada’s jobs market
BMO chief economist Doug Porter said the employment data would be good news for Canada, if it were not for Trump’s looming tariffs.
“If we weren’t all absorbed with the possibility of a trade war, we would be talking about the comeback in the Canadian domestic economy in recent months. The turnaround in job growth, even amid cooler population trends, reinforces the message from firmer auto and home sales that the economy was turning a corner thanks to the heavy-duty drop in interest rates in the past eight months,” he said in a note Friday.
Porter added, “Alas, we still need to contend with the lingering uncertainty on the trade front, which casts a cloud over these sunny jobs figures.”
TD Bank senior economist Leslie Preston said tariffs could slow down hiring in the coming months.
“Unfortunately, the imminent threat of tariffs hanging over the Canadian economy, is likely to temper business confidence and could weigh on hiring in some sectors in the coming months,” Preston said.
Nathan Janzen, assistant chief economist at the Royal Bank of Canada, said a firm labour market will reduce the urgency for the Bank of Canada to cut interests rates in March. However, Trump’s tariffs could weigh on that decision too.
“There remain significant risks that U.S. tariffs could be announced before the March policy meeting, and another round of labour market and inflation data still to be released before then,” he said.
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