Canada records job losses in January as labour market shows new signs of strain

Canada’s economy took a step backward in January as the country recorded a net loss of about 25,000 jobs, according to the latest Labour Force Survey released by Statistics Canada. The decline marks the first monthly drop in employment since late summer and signals renewed pressure in key sectors tied to trade and construction.

The manufacturing and construction industries experienced the sharpest losses, with economists pointing to ongoing trade uncertainty and U.S. tariff pressures as contributing factors. Private-sector employment and part-time work were particularly affected, while women between the ages of 25 and 54 accounted for a significant share of the decline.

Despite the job losses, Canada’s unemployment rate fell to 6.5 per cent in January, down from 6.8 per cent in December. Statistics Canada says the drop does not reflect stronger hiring but rather a decrease in labour force participation, as many people stopped actively searching for work and were no longer counted as unemployed.

The agency estimates that nearly 12 million Canadians aged 15 and older are currently outside the labour force. A portion of that group includes discouraged workers who believe suitable jobs are not available based on their skills or experience, a trend that has been growing amid slower economic momentum.

Financial markets are closely watching the labour data, with many analysts suggesting the cooling job market could influence the Bank of Canada’s next moves. Expectations have increased that the central bank may keep interest rates unchanged in the months ahead as it balances inflation concerns against signs of economic softness.