Canada's January Job Report: What 94,000 Canadians Leaving the Workforce Means for You

Published: February 6, 2026 | Source: Statistics Canada Labour Force Survey

The latest job numbers from Statistics Canada paint a complicated picture for Canadian workers, and the headline unemployment rate doesn't tell the whole story.

The Headline Numbers

Canada lost 24,800 jobs in January 2026, yet the unemployment rate dropped from 6.8% to 6.5%, the lowest since September 2024.

How is that possible? Because 94,000 Canadians stopped looking for work altogether.

Amidst an industrial backdrop, a diverse group of people walks with briefcases and hard hats, illustrating the 94,000 Canadians who have ceased job hunting, reflecting a significant shift in the labor market.

The Real Story: Labour Force Participation Slumps

The labour force participation rate, the share of working-age Canadians either employed or actively job-hunting fell 0.4 percentage points to 65% in January.

What this means: Nearly 100,000 people gave up their job search. They're not counted as "unemployed" because they're no longer looking. This makes the unemployment rate appear better than the actual health of the job market.

As of January, 12.4 million Canadians aged 15+ were outside the labour force, up 2.7% from last year.

Who Stopped Looking?

Discouraged workers represented 34,000 of those outside the workforce, people who don't believe suitable jobs exist for their skills. That's up 0.1 percentage points year-over-year.

Youth unemployment (ages 15–24) dropped by half a percentage point, but primarily because more young people stayed in school rather than entering the workforce. The share of youth attending school rose 2.2 percentage points compared to last year.

Where Jobs Were Lost: Provincial Breakdown

Ontario: Hit Hardest

• Lost 67,000 jobs, bearing the brunt of national losses

• Manufacturing sector devastated, particularly in auto and steel

• Labour force participation also declined sharply in this province

Provinces That Gained Jobs

• Alberta: +20,000 jobs (+0.8%); unemployment fell to 6.4%

• Saskatchewan: +6,100 jobs (+1.0%); unemployment dropped 1.1 points to 5.3%

• Newfoundland and Labrador: +3,800 jobs (+1.6%); unemployment down 1.3 points to 9.2%

Alberta's year-over-year performance: Added 86,000 jobs since January 2025 (+3.4%), showing strong regional growth despite national weakness.

Canadian Provincial Employment Performance: Alberta leads with a gain of 20,000 jobs, followed by increases in Saskatchewan and the Atlantic Provinces with 6,100 and 3,800 jobs respectively. In contrast, Ontario faces a significant job loss of 67,000, highlighting regional disparities in employment trends.

Industries Hit Hardest

Manufacturing: The Big Loser

• Lost 28,000 jobs in January alone

• Down approximately 51,000 jobs from one year earlier

• Tariffs from the U.S. trade war continue to hammer this sector

Context: Nine months into U.S. tariffs on Canadian goods (steel, aluminum, autos), manufacturing employment continues its steep decline.

Other Sectors with Job Losses

• Education: significant losses

• Professional, scientific and technical services: declined

Industries That Added Jobs

• Information, culture and recreation: gains

• Business, building and other support services: gains

• Agriculture: modest gains

• Utilities: modest gains

Full-Time vs. Part-Time: A Bright Spot

While overall employment fell, there was a silver lining in job quality:

• Full-time jobs: +45,000 (+0.3%)

• Part-time jobs: -70,000 (-1.8%)

This shift toward full-time work is positive for workers seeking stability and benefits. Year-over-year, full-time employment is up 149,000 jobs (+0.9%).

Canada experiences a significant job market shift as full-time positions increase by 45,000, reflecting a positive move towards stability, while part-time roles see a decline of 70,000, indicating a reduction in temporary employment opportunities.

Wage Growth: Slowing but Still Positive

Average hourly wages rose 3.3% year-over-year, adding $1.18 per hour to reach $37.17/hour.

Note: This is down slightly from December's 3.4% growth, suggesting wage pressure is easing as the labour market cools.

Workers Planning to Leave Their Jobs

According to additional StatCan survey data, 7.1% of permanent employees (ages 15–69) plan to leave their jobs within the next 12 months, up 1.0 percentage point from last year.

Who's Planning to Leave?

• Youth (15–24): 13.3% planning to leave (up 2.5 points year-over-year)

  • Main reasons: returning to school (32.1%) or career change/advancement (29.2%)

• Core-aged workers (25–54): 5.8% planning to leave

  • Main reasons: career change/advancement (38.8%) or low pay concerns (17.1%)

Tariff-Exposed Industries

Among workers in sectors dependent on U.S. demand, 5.4% of core-aged permanent employees plan to leave their jobs in the next year, up 1.5 percentage points from January 2025, reflecting uncertainty from ongoing trade tensions.

Market Conditions and What's Next

Bank of Canada's Response

Governor Tiff Macklem indicated on February 5 that the central bank will hold its benchmark interest rate at 2.25% for now. The bank expects:

• An "uneven" labour market recovery in 2026

• Little growth in the labour force for much of the year

• Some sectors gaining while others lag

Translation: Don't expect rate cuts soon. The mixed signals from this jobs report won't change the BoC's wait-and-see approach.

Economic Context: Three Forces at Play

Economists note Canada's labour market is adjusting to three major changes simultaneously:

1. U.S. tariffs: debilitating manufacturing and export-dependent sectors

2. Population slowdown: an abrupt drop in immigration and population growth

3. Aging workforce: rising share of Canadians 65+ leaving the workforce

Result: The "natural" unemployment rate may be drifting lower, meaning job losses don't automatically mean the economy is in trouble. But slower population growth also means less economic momentum overall.

Growth Outlook

TD Bank's projection: Canada's population is expected to shrink in 2026, creating a smaller pool of available workers. Under these conditions, unemployment can fall even if the country loses jobs.

RBC's forecast: Expects unemployment to drop to 6.3% by year-end 2026, assuming trade stability returns and hiring demand rebounds.

Capital Economics: Calls the 119,000-person labour force decline "the largest drop in five years," attributing it to collapsing population growth. Expects further unemployment rate declines this year.

What This Means for You

If You're Job Hunting

• Competition may ease slightly as fewer people search, but available openings are also shrinking

• Manufacturing jobs remain risky; consider sectors like healthcare, business services, or information/tech

• Alberta and Saskatchewan show stronger regional momentum if relocation is an option

If You're Employed

• Full-time work is becoming more common, a good sign for stability

• Wage growth is slowing but still positive at 3.3%

• If you're in manufacturing or U.S.-exposed sectors, consider skills diversification or career contingency planning

If You're Considering Leaving Your Job

• You're not alone, 7.1% of permanent workers share this intention

• Main motivations: career advancement (most common) and pay concerns

• Research sectors with growth potential rather than those facing tariff headwinds

The Bottom Line

January's job report is a "mixed bag", job losses concentrated in Ontario manufacturing, but full-time work increasing and some provinces thriving. The falling unemployment rate looks good on paper but masks a troubling trend: nearly 100,000 Canadians gave up their job search.

For Canadians, this means:

• Be cautious if you're in manufacturing or export-heavy industries

• Stay informed about regional opportunities (western provinces outperforming)

• Focus on skills that transfer across industries

• Build your emergency fund, uncertainty remains high

The labour market recovery will be uneven in 2026. Some will thrive; others will struggle. The key is staying adaptable.

Let's get money-wise together. Understand the economic trends that affect your wallet, and make informed decisions about your career and finances.

Sources:

• Statistics Canada, Labour Force Survey (January 2026) — Released Feb 6, 2026

• Bank of Canada Governor speech — Feb 5, 2026

• TD Economics, RBC Economics, CIBC Capital Markets, Capital Economics, BMO — analysis published Feb 6, 2026

Have questions about navigating job changes or building financial security during uncertain times? Contact The Money Wise for personalized financial coaching.

Website: www.themoneywise.ca

Email: hello@themoneywise.ca

Instagram: @themoneywise.ca

Facebook: Facebook.com/TMWJDR