Canada Loses 24,800 Jobs in January 2026 as Unemployment Rate Falls to 6.5% | Latest Labour Market Report

Canada Loses 24,800 Jobs as Unemployment Rate Falls to 6.5%

On February 6, 2026, Canada released its latest labour force data, revealing an unexpected and intriguing development. In January 2026, approximately 24,800 jobs were lost, yet the unemployment rate fell to 6.5%, marking the lowest level in 16 months. At first glance, this may seem contradictory, as unemployment typically rises when jobs are lost. However, the main reason for this anomaly is that a significant number of individuals either stopped looking for work or exited the labour force entirely, reducing the unemployment rate by calculation.

During the same month, full-time employment increased by 44,900, while part-time employment declined by 69,700. The largest job losses occurred in manufacturing, education, and public administration, while sectors such as information, business services, agriculture, and utilities saw gains.

Provincial disparities were evident. Newfoundland and Labrador recorded an unemployment rate of 9.2%, Ontario 7.3%, Alberta 6.4%, British Columbia 6.1%, and Quebec 5.2%, highlighting that unemployment impacts varied across regions. A five-year review shows that following the post-COVID recovery from 2021 to 2023, unemployment hovered between 5.5% and 6.5%. In 2024, the rate reached approximately 6.7% before declining to between 6.3% and 6.5%. In March and April 2025, it briefly rose to 6.9%, but by December 2025, it fell back to 6.5%. January 2026 maintained the 6.5% rate, although the overall number of jobs decreased.

Several factors explain this trend. The primary cause is a decline in the labour force, with people either leaving the workforce, retiring, or pursuing further education. Another factor is the pressure on the manufacturing sector from global supply chain disruptions and U.S. tariffs, leading to job losses. Additionally, the sharp drop in part-time positions, coupled with seasonal effects, contributed to the overall decline in employment. The Bank of Canada maintained its policy rate at 2.25%, stating that the current situation reflects a softening market rather than an urgent need for immediate policy changes.

It is important to note that a falling unemployment rate does not necessarily indicate positive economic news, as total employment declined. This phenomenon is largely statistical, as individuals who are no longer actively seeking work are not counted as unemployed. If the labour force expands again in the future, a more accurate measure of true unemployment will emerge. Therefore, careful analysis of these figures, in the context of labour market participation and job opportunities, is essential to understand the real state of Canada’s economy.