Statistics Canada reported an increase in job seekers in December, leading to a rise in the unemployment rate. Canada added 8,200 new jobs last month, pushing the unemployment rate to 6.8%, up from 6.5% in November. This follows three months of significant job growth, with the economy creating 181,000 new jobs from September to November, a stark contrast to the stagnant job market earlier in 2025 due to U.S. tariffs and trade uncertainties.
RBC’s assistant chief economist, Nathan Janzen, viewed the influx of new job seekers as a positive development. While the rise in job seekers can elevate the unemployment rate, it indicates that more Canadians who were previously inactive in the job market now have a more optimistic outlook on securing employment.
The job gains in December were primarily in full-time positions, adding 50,200 jobs, while part-time employment decreased by 42,000. The healthcare and social assistance sector saw a rise of 21,000 jobs, whereas the professional, scientific, and technical services sector experienced a decline of around 18,000 jobs, marking its first drop since August. Manufacturing, a sector sensitive to trade, added 4,300 jobs in December.
Although job gains were more significant for individuals aged 55 and above, young Canadians continued to face challenges in the job market, with youth unemployment for those between 15 and 24 years old increasing to 13.3%. Average hourly wages saw a 3.4% year-over-year increase in December, slightly lower than the 3.6% growth in November.
Analysts had anticipated a net loss of 5,000 jobs and a slight uptick in the unemployment rate to 6.6%. Despite facing headwinds from U.S. tariffs earlier in the year, the labor market showed signs of improvement as 2025 drew to a close.
BMO’s chief economist, Douglas Porter, viewed the December job figures as a return to a more realistic pace of job gains. He suggested that the modest numbers were unlikely to impact the Bank of Canada’s decisions on interest rates, supporting the prediction that the bank would maintain its current rates.
The recent job 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 opted to keep its policy rate unchanged at 2.25%.