Canada’s unemployment rate saw a slight decline in January, signalling positive movement in the Labor market. According to Statistics Canada, the country created 76,000 new jobs last month, causing the unemployment rate to drop by 0.1 percentage points to 6.6%. This marks the second consecutive month of decline, following a rise to 6.8% in November of the previous year.
Andrew Grantham, CIBC’s chief economist, expressed optimism about the report, calling it “very positive overall.” However, he noted that despite the decrease in unemployment over the past two months, many workers remain vacant in the labour market.
The manufacturing sector showed the most significant growth in employment, adding 33,000 jobs in January. Over 10,000 of these new jobs were created in Ontario. However, compared to the previous year, the increase in manufacturing jobs was more modest, with a total of 28,000 new positions. Statistics Canada underscored the importance of the manufacturing sector, highlighting that around 40% of Canada’s 1.9 million manufacturing jobs are tied to U.S. demand. The auto sector is heavily reliant on U.S. exports, with approximately 70% of jobs depending on this market.
These figures come amid heightened economic tensions between the U.S. and Canada. U.S. President Donald Trump had threatened to impose a 25% tariff on all Canadian imports. However, after Canada took steps such as designating drug cartels as terrorist organizations and appointing a “fentanyl czar” to oversee drug-related issues, Trump suspended the tariffs for a month.