Canadian Employment (December 2025)

Canada's unemployment rate jumps as labour force expands to close 2025

• Canada's economy added 8k jobs in December (+0.0% month/month), 10k more than consensus expectations for a 2.5k decline. The details were healthier, with full-time positions rising 50k, while part time decline 42k. In the twelve months to December part-time work advanced 2.6% (+99k) while full-time work rose 0.7% (+128k).
• The unemployment rate rose to 6.8% from 6.5% in November (consensus expectations were for a rise to 6.7%) and is 0.1 percentage points (ppts) above the 6.7% last December. The unemployment rate was lifted by 81k entrants into the labour force. This boosted the labour force participation rate by 0.3 ppts – its highest level since July and in line with December 2024. 
• Job gains were once again concentrated in health care and social assistance (+21k), with other services (+15k) and construction (+11k) also being notable contributors. The biggest losses were in professional, scientific and technical services (-18k), and accommodation and food services (-12k).
• Wage growth slowed in December, with average hourly wages up 3.4% versus a year ago (3.6% in November).                

Key Implications

• After a string of upside surprises, the Canadian labour market gave back some of its gains in December, with job growth effectively petering out, and the unemployment rate ticking higher as more people started looking for work. In a noisy data series, this is not all that surprising and remains in line with our view that the labour market is not yet out of the woods. 
• This report is unlikely to move the needle for the Bank of Canada. There is still slack in the labour market, but uncertainty about the supply side of the economy and the risk to inflation means they are unlikely to tip the policy rate into accommodative territory.

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