Canada’s unemployment rate jumped to 6.8 per cent in December 2025 as the trade war and U.S. tariffs continued to impact the job market.
Statistics Canada on Friday reported the Labour Force Survey for December, which showed that a net 8,200 jobs were added in the month.
“Rather than signaling a setback, December’s modest employment gain and rising unemployment rate reinforce our view that Canada’s labour market recovery is underway but will likely prove choppy, with slack absorbed only gradually over time,” Claire Fan, a senior economist with Royal Bank of Canada, said in a written note.
“Most of the new entrants into the labour market were not absorbed by new employment, and therefore contributed to rising unemployment rate.”
December’s report showed that the unemployment rate was up 0.3 per cent from November’s reading of 6.5 per cent, and followed three months of job growth.
The agency says 1.6 million people were unemployed last month, which was up by 73,000 compared with November 2025. At the same time, the percentage of the population aged 15 or older that was employed in December was unchanged at 60.9 per cent.
Get breaking National news
“The Canadian labour market ended 2025 on a softer note, with employment steady, and the unemployment rate edging up,” Brendon Bernard, senior economist at Indeed, said in a written note.
“Given the volatility of the Labour Force Survey, a slower month following this recent strength didn’t seem far-fetched. The underlying trend is probably somewhere in between.”
December saw the most jobs added in health care and social assistance, followed by what the agency calls “other services,” which it says includes personal and repair services.
Youth aged 15 to 24 saw 27,000 jobs lost, while 33,000 jobs were added for those aged 55 and older.
Youth unemployment increased half a percentage point to 13.3 per cent.
Statistics Canada says that throughout 2025, part-time employment rose at a faster pace — 2.6 per cent — than full-time employment at 0.7 per cent.
Jobs were lost mostly in professional, scientific and technical services, followed by accommodation and food service jobs and then utilities.
- WestJet execs tried cramped seats on flight weeks before viral video sparked backlash
- Pizza wars? As U.S. chains fight for consumers, how things slice up here
- Health Canada says fake Viagra, Cialis likely sold in multiple Ontario cities
- Canada increased imports from the U.S. in October, StatCan says
In 2025, the unemployment rate peaked at 7.1 per cent in August and September — the highest since 2016, outside of 2020 and 2021, being pandemic years.
Bernard expects the labour market in 2026 will likely see similar challenges to 2025, but a lot will depend on how the trade war evolves.
“An uptick in economic growth could help deliver some job market improvement, but there’s been little sign that activity will be robust enough to materially reverse the slide in employer hiring appetite — and resulting jobseeker challenges,” he said.
“Meanwhile, uncertainty to the outlook, particularly from the U.S. trade situation, looms.”
A report from Deloitte Canada, released Wednesday, forecasts 2026 to see businesses pulling back on hiring plans for the first six months as tariffs are expected to slow down demand for Canadian goods and services.
Comments