Canada ended the year with a higher unemployment rate, even though more jobs were added to the economy.
According to Statistics Canada, the unemployment rate climbed to 6.8% in December, up from 6.5% in November. The increase was driven by more people actively looking for work, not by widespread job losses.
💼 Jobs Still Added, Beating Expectations
Despite the higher jobless rate, the economy added 8,200 jobs in December, outperforming forecasts. Economists had expected a small decline after strong gains earlier in the fall.
Most of the growth came from full-time positions, suggesting underlying labour demand remained intact.
🏥 Where Jobs Grew (and Where They Didn’t)
Sectors with gains:
- Health care and social assistance led the way, adding 21,000 jobs
- Construction posted modest growth
- Other services (including personal and repair services) also expanded
- Manufacturing, which is sensitive to trade conditions, added 4,300 jobs
Sectors with losses:
- Professional, scientific, and technical services shed 18,000 jobs
- Accommodation and food services also declined
Statistics Canada noted that U.S. tariffs weighed on the labour market through much of 2025, but conditions improved somewhat toward the end of the year, helping stabilize hiring.
Average hourly wages rose 3.4% year-over-year in December, easing from 3.6% in November. This cooling in wage growth may help reduce inflation pressures over time.
👩🎓 Youth Workers Still Under Pressure
Young Canadians continued to face challenges in the labour market:
- Workers aged 15 to 24 lost 27,000 jobs in December
- The youth unemployment rate rose to 13.3%
- While still elevated, this is lower than the 15-year high of 14.7% reached in September (outside the pandemic period)
🏦 What This Means for Interest Rates
This jobs report is the final labour-market snapshot before the Bank of Canada makes its first interest rate decision of the year.
Economists believe the data supports a wait-and-see approach:
- BMO says December’s results likely reflect a more realistic pace of hiring after unusually strong gains earlier
- TD Bank expects ongoing uncertainty and inflation risks to keep rates unchanged
The Bank of Canada last held its policy rate at 2.25%, calling it an appropriate level to balance inflation control and economic support.
🔍 Bottom Line
Canada’s unemployment rate moved higher in December largely because more people entered the labour market, not because hiring collapsed. Job growth continued, particularly in full-time roles and essential sectors like health care, while wage growth showed signs of cooling.
Overall, the data points to a labour market that is slowing but not breaking, which supports the view that the Bank of Canada is likely to remain on hold rather than rush into any policy changes.
🤔 Does Victor recommend locking in your Variable rate mortgage at this time?
☐ Yes
☐ No
✅Not Yet
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