MARKET OVERVIEW

Labour force survey: Canadian employment sees largest 3-month gains in nearly 2 years

JOBS ADDED IN JANUARY

Employment in Canada increased by 76,000 jobs in January, exceeding economists’ predictions of 25,000. This marks the largest 3-month increase since early 2023, following gains of 91,000 jobs in December and 44,000 in November, for a total of 211,000 jobs added over the 3-month period.

LABOUR FORCE PARTICIPATION RATE

Meanwhile, the labour force participation rate—the proportion of the population age 15 and older who are working or looking for a job—increased by 0.1 of a percentage point to 65.5% in January. This comes after the rate remained at 65.4% in November and December.

JANUARY EMPLOYMENT RATE

The employment rate—or the proportion of the population age 15 and older who have a job—increased by 0.1 percentage point in January to 61.1%, its third consecutive monthly increase.

UNEMPLOYMENT RATE

After peaking at 6.9% in November 2024, the unemployment rate fell to 6.6% in January, lower than the 6.8% economists had predicted. This is the second consecutive month the unemployment rate dropped, after falling 0.2 percentage points in December.

Sources: Statistics Canada, CBC, Staffing Industry Analysts, Trading Economics

James McLernon Managing Partner

“After a tough couple of years, we're seeing a renewed sense of optimism in the Canadian labour market. Projects that were on hold are now moving forward, and we’ve seen direct hiring—particularly in technology—pick up significantly. Key sectors like logistics and transportation, technology, and financial services are increasing their staffing investments, supported by a surge in demand for specialized talent across AI, machine learning, and cybersecurity.

At the same time, fewer skilled professionals are actively searching for opportunities, especially in tech, where unemployment rates have dropped. Companies that move quickly, proactively engage top talent, and streamline their hiring processes should be able to capitalize on a revitalized labour market. With a new fiscal year kicking off April 1, the next few months are shaping up to be a critical window for organizations looking to secure top-tier talent and grow their business.”

MARKET OVERVIEW

Canadian staffing index

The Canadian staffing index—which reflects the volume of labour supplied by temporary staffing agencies in Canada—dipped to 79 in December, down 3.7% versus December 2023. Month-over-month, the index fell by 10.2%. The decline suggests a high-single-digit year-over-year decline in volume across Canada’s staffing industry, according to Timothy Landhuis, Vice President of Research at Staffing Industry Analysts.

Source: Association of Canadian Search, Employment & Staffing Services (ACSESS)

Kevin Jeewan Managing Partner

"We saw more stability in the Canadian job market towards the end of 2024, with the economy adding 91,000 jobs in December. In the technology and finance verticals, we‘re starting to see further tightening of the qualified labor supply—to the extent that multiple employers are issuing offers to the same candidates, and many are also making counter offers to retain their talent. Although overall unemployment numbers remain high, unemployment rates in specialty areas like finance, accounting, and IT remain very low.”

MARKET OVERVIEW

Recession watch 2025

Can lower interest rates sustain a decelerating population?

S&P Global expects GDP growth to increase to 1.7% in 2025, down slightly from its previous projection of 2.0%.
A slowdown in Canada’s population growth, driven by new immigration restrictions, will offset any economic boost from lower borrowing costs, according to S&P Global. The reduction in population, it says, will lower both demand and the labor supply.
S&P Global anticipates that the Bank of Canada will steadily cut interest rates until they reach 2.25% by the middle of 2025.
A big risk for the Canadian economy in 2025, the rating agency says: Uncertainty over the Trump administration’s tariff policies.

Source: S&P Global

Bank of Canada lowers interest rates to 3%—its sixth consecutive cut

In January, Canada’s Central Bank lowered interest rates to 3% from 3.25%—the sixth consecutive cut since June. Economists are projecting a 50% chance of another rate cut in March.
The central bank also lowered its 2025 gross domestic product (GDP) forecast from 2.1% to 1.8%, citing slower population growth as the main factor.
The Canadian economy shrank by 0.2% in November after growing 0.3% in October. Preliminary estimates show a 0.2% rebound in December, driven by increases in retail trade, manufacturing, and construction.
Early forecasts indicate Canada’s GDP grew at an annualized rate of 1.8% in the fourth quarter, close to the Bank of Canada’s expectations.
The consumer price index (CPI) rose 1.9% year-over-year in January, up from 1.8% in December. On a monthly basis, the CPI rose 0.1% in January, following a 0.4% decline in December.

Sources: Reuters, CBC, Statistics Canada

Tom Turpin Senior Vice President and Executive Partner

“Markets crave stability, but uncertainty is causing companies to hesitate on major projects and investments—even ones they planned to move forward with just a month or two ago. Despite short-term caution, many are pushing ahead, especially in tech, where long-delayed projects are finally being put into motion.

Organizations are recognizing that waiting too long can mean falling behind. After a slower pace of growth in recent years, cautious momentum is building, and the potential for further rate cuts could help stimulate the economy and encourage businesses to move forward with their investments. While global instability and supply chain challenges remain, companies that take a proactive approach will be in a stronger position when conditions begin to stabilize.”