Statistics Canada reported an increase in job seekers in December, leading to a rise in the unemployment rate to 6.8%, up from 6.5% in the previous month. Canada saw a modest addition of 8,200 new jobs during the month, following three months of significant employment growth. The economy had experienced substantial job gains of 181,000 between September and November, contrasting with minimal changes earlier in 2025 due to trade uncertainties and U.S. tariffs.
RBC’s assistant chief economist, Nathan Janzen, described the influx of individuals entering the labor force as a positive development. While the rise in job seekers can contribute to the uptick in the unemployment rate, it indicates that Canadians previously inactive in the job market may now be more optimistic about their job prospects.
The job growth in December was mainly in full-time positions, with an increase of 50,200 jobs, while part-time employment declined by 42,000. Sectors like health care and social assistance saw a rise of 21,000 jobs, whereas professional, scientific, and technical services experienced a decrease of around 18,000 positions, marking the first drop since August. Additionally, the manufacturing sector, sensitive to trade conditions, added 4,300 jobs in December.
Although job gains were higher for individuals aged 55 and above, the job market remained challenging for young Canadians, as youth unemployment for those between 15 and 24 years old increased to 13.3%. Average hourly wages rose by 3.4% year-over-year in December, slightly lower than the 3.6% increase in November.
Analysts had anticipated a net loss of 5,000 positions and a slight rise in the unemployment rate to 6.6%, according to a Reuters poll conducted before the release of the data. The labor market faced challenges from U.S. tariffs during much of 2025, but conditions improved for job seekers towards the end of the year.
BMO’s chief economist, Douglas Porter, mentioned that the December data bring job gains back to a more realistic level after significant fluctuations in the previous months. He suggested that these moderate numbers are unlikely to impact any potential interest rate changes by the Bank of Canada, supporting his prediction of the bank maintaining its current rates.
The latest jobs report provides the Bank of Canada with insights into the labor market ahead of its upcoming interest-rate decision later this month. In its last decision of the year, the central bank had kept its policy rate unchanged at 2.25%.
