By Erik Hertzberg
(Bloomberg) — The Canadian economy posted employment gains for a fourth consecutive month, but the jobless rate rose as the number of unemployed people grew by the most in three years.
Employment rose by 8,200 in December, bringing cumulative job gains to 188,800 over the past four months, Statistics Canada reported Friday. The jobless rate jumped 0.3 percentage points to 6.8%.
Economists in a Bloomberg survey expected the economy to shed 2,500 positions, with an unemployment rate of 6.7%.
The labour force expanded by 81,000 in December, the most since November 2024 and led by increases in Ontario and Quebec — the country’s two largest provinces. That brought the participation rate up to 65.4%.
Most of the people who joined the labour force last month didn’t find jobs, pushing unemployment up by 72,900, the biggest monthly increase since August 2022.
The report was released at the same time as U.S. data showed nonfarm payrolls rose 50,000 last month, below forecasts, while the unemployment rate edged down to 4.4%. The Canadian two-year government bond yield was little changed on the day at 2.560%, while the loonie traded at C$1.3877 per U.S. dollar, as of 9:01 a.m. in Ottawa.
In Canada, gains were driven by an increase of 50,200 full-time jobs and growth in self-employment. Health care and social assistance added 20,800 positions, while the construction sector added 11,200 roles. Part-time employment fell by 42,000.
The small job gains suggest the Canada’s job market is holding firm even as US tariffs hit exports and investment. But the jump in the unemployment rate will raise questions about the extent to which labour market slack has been absorbed in recent months. It’s the first increase to the rate since August.
Even though many of the country’s goods exports are exempt from US levies if they comply with the U.S.-Mexico-Canada Agreement, there’s still clear damage from the ongoing trade dispute.
The data continue to show that sectors not affected by the U.S. trade conflict remain the main source of job gains, Charles St-Arnaud, chief economist at Servus Credit Union, said in an email.
“Overall, today’s report shows some resilience in the labour market,” he said. “This will allow for a pick up, albeit modest, in economic activity in 2026. With this in mind, it supports the Bank of Canada’s recent assessment that there is no need for further policy rate cuts, unless the economy deteriorates.”
Traders in overnight swaps continue to expect the central bank to hold its key rate steady at 2.25% for most of this year, after policymakers said rates are at “about the right level” as long as growth and inflation evolve as expected. The next rate decision and monetary policy report is Jan. 28.
In total, Canada’s economy added 226,300 jobs from a year earlier, a 1.1% increase that was the weakest pace of employment growth in a calendar year since 2016, excluding the pandemic. Job vacancies also fell through most of the year, the statistics agency said, pointing to weakened labour demand.
“The economy isn’t accelerating or collapsing, but rather churning out modest growth,” Benjamin Reitzes, rates and macro strategist at Bank of Montreal, said in an email. “Until there’s more certainty on the trade front with USMCA, it’s tough to see the growth ramping up materially, though government stimulus will help.”
Total hours worked fell 0.3% in December from the previous month. Employment gains were highest in Quebec, while the western provinces of Alberta and Saskatchewan shed jobs.
Yearly wage growth for permanent employees decelerated to 3.7%. The unemployment rate for core- age workers, 25 to 54 years old, rose to 6%.
–With assistance from Mario Baker Ramirez.
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Last modified: January 9, 2026
