Statistics Canada reported an increase in job seekers in December, leading to a rise in the unemployment rate at the year’s end. Canada saw a modest addition of 8,200 new jobs in December, causing the unemployment rate to climb to 6.8%, up from 6.5% in the previous month.
After three months of substantial employment growth, with a total of 181,000 new jobs created from September to November, the economy showed resilience. This contrasted with minimal job changes in the first eight months of 2025, attributed to U.S. trade uncertainties and tariffs hindering hiring.
RBC’s assistant chief economist, Nathan Janzen, viewed the influx of individuals entering the labor force as a positive development. While a surge in job seekers can elevate the unemployment rate, it indicates improved optimism among Canadians previously disengaged from the job market.
The job gains in December were primarily in full-time positions, with an addition of 50,200 jobs, while part-time employment decreased by 42,000. The health care and social assistance sector saw a rise of 21,000 jobs, whereas the professional, scientific, and technical services sector experienced a decline of approximately 18,000 jobs, marking the first drop since August. Additionally, the manufacturing sector, sensitive to trade fluctuations, added 4,300 jobs in December.
Employment prospects were more favorable for individuals aged 55 and above, while young Canadians faced continued challenges in the job market. Youth unemployment for those aged 15 to 24 increased to 13.3%, up by half a percentage point. However, this was an improvement from the 15-year high of 14.7% recorded in September outside of the COVID-19 pandemic.
Average hourly wages saw a 3.4% year-over-year increase in December, slightly cooling from the 3.6% growth in November. Analysts, surveyed by Reuters before the release, had anticipated a net job loss of 5,000 positions, with the unemployment rate inching up to 6.6%.
Despite facing headwinds from U.S. tariffs earlier in 2025, the Canadian labor market showed signs of improvement towards the year’s end. BMO’s chief economist, Douglas Porter, considered the December figures to reflect a more realistic job growth scenario after significant fluctuations in the past months.
Porter indicated that the moderate job numbers were unlikely to impact the Bank of Canada’s interest rate decisions, supporting his forecast of the bank maintaining current rates. The recent jobs report serves as the Bank of Canada’s final review of the labor market before its upcoming interest-rate deliberations later this month, following the bank’s decision to hold the policy rate steady at 2.25% in its last announcement of the year.