It’s not all bad: Experts break down latest job numbers

Canada’s labour market remains relatively stable by historical standards, but slowing hiring is hitting young jobseekers hard, with youth unemployment climbing and racialized youth facing particularly high jobless rates.

In February, the national economy lost 84,000 positions, led by Quebec’s 57,000 job losses — the largest non‑pandemic employment decline in the province in at least 50 years, according to a Desjardins analysis. 

However, economists caution that the headline figures may overstate the extent of weakness. The monthly Labour Force Survey from Statistics Canada is based on a sample of households, and experts note it can be affected by short‑term “noise” that does not fully reflect underlying economic conditions, according to a Desjardins report cited by the Montreal Gazette.

The report on Quebec’s losses concluded that “one month does not make a trend, but it certainly knows how to grab attention.”

Wage growth 'pretty decent'

Fabian Lange, a professor of economics at McGill University and Canada Research Chair in Labour Economics, similarly warned against over‑interpreting a single release. “Things are fine … currently,” he said, summarizing the broader data.

Lange noted that these are not the kinds of layoffs that typically signal an imminent recession, and that several conventional indicators remain relatively strong.

“Wage growth is actually pretty decent,” he said, adding that wages are up, the unemployment rate is still low by historical standards, and the overall employment rate is high. Even with slower hiring, companies are raising pay to retain existing staff, according to the Montreal Gazette.

At the same time, Lange said he sees “declines in hiring,” explaining that “companies are hiring fewer new employees, but there are no large layoffs, which means the unemployment rate is only slowly moving up.” That shift, from broad layoffs to reduced intake, is having a disproportionate impact on younger workers trying to enter the labour market.

Canadian employers in agriculture and those in Prince Edward Island can now apply for federal and provincial wage subsidies to hire young workers this summer, with governments positioning the funding as a way to reduce labour costs and build future talent pipelines.

Youth unemployment climbs

Among Canadians aged 15 to 24, the unemployment rate rose 1.3 percentage points in February to 14.1%, as employment for this group fell by 47,000 jobs, according to StatCan. The agency said the increase brought youth unemployment “closer to the recent high of 14.6% reached in September 2025, which was the highest since 2010 (excluding 2020 and 2021).” On a year‑over‑year basis, the youth unemployment rate was up one percentage point.

In an analysis by Brendon Bernard, senior economist at job site Indeed, he noted: “Youth employment rates in particular have fallen back to their September levels after bouncing up toward the end of the year.”

Young people are having a hard time finding a job, agreed Lange . “People leaving college, leaving high school and entering the labour market are taking longer than usual to find their first employment.” He suggested that “entry‑level positions have to be rethought, generally,” as employers adjust to uncertainty and changing skill needs.

StatCan data show racialized youth are experiencing significantly higher unemployment than their non‑racialized peers. 

Demographic pressures and delayed retirement

Longer‑term demographic changes are also shaping the labour market backdrop. More Canadians are reaching retirement age, which reduces the share of the population that is working. At the same time, many people in their late 50s and early 60s are remaining in the workforce longer than earlier cohorts.

“These two trends are kind of holding the balance, almost,” Lange said, according to the Montreal Gazette report. As older workers defer retirement and employers add fewer new positions, younger workers are encountering fewer openings at the entry level.

Rosalie Forgues, an economist with Québec International, said very low unemployment rates can themselves create risks. As the available workforce becomes scarcer, “businesses may delay their recruitment and investment decisions due to insufficient capacity to fill key positions,” she wrote in a post on the organisation’s website. She added that labour conditions vary widely by sector, reflecting “a highly heterogeneous labour force in the region.”

Forgues warned that strong employment growth can contribute to inflationary pressures as businesses increase wages and pass higher costs through to prices. This “heightened tension could cause labour shortages, slow down projects and increase production costs, weakening the competitiveness of those sectors that are especially exposed to international competition,” she said. While the region has not reached a critical point, she argued that “the current tightening of the labour market requires more vigilance, because an overheating economy can become an obstacle to its own growth.”

Uncertainty, AI and cautious hiring

Beyond demographics, Lange described the current period as one of “profound uncertainty.” He pointed to trade tensions with the United States, global conflicts and shifting economic policies that are making firms more cautious about expanding payrolls.

Rapid technological change, particularly the rise of artificial intelligence and large language models, is another source of hesitation. “I think we’re also in a period of technological uncertainty,” Lange said, according to the Montreal Gazette. “Firms are not sure how the emergence of AI, of large language models affects the work that they have to do, and so they are holding back with hiring. You don’t want to hire somebody and train somebody for a job that you’re not sure they need to be trained for two years down the road.”

Lange also noted that the Canadian labour market is influenced by developments south of the border. “The Canadian economy is part of the North American economy, and there’s been this guy sitting in Washington basically doing his best to screw it up,” he said, referring to U.S. policy‑driven uncertainty. Even so, he said the labour market has shown resilience in recent years. “If you think back to COVID, there was a short, sharp downturn in the labour market, and then a very rapid, very robust recovery,” he said.

AI is slowing down hiring for many Canadian employers and increasing workloads for already stretched HR teams, according to new research from talent solutions and business consulting firm Robert Half.

Risks ahead

For now, most economists say the labour market appears to be softening rather than collapsing, but warn that the outlook could shift quickly if a new shock coincides with already‑weak hiring.

“It’s the future. We don’t know,” Lange said, according to the report. “I do worry that if there is an event like a war in the Middle East, or a crisis in some part of the financial sector … that suddenly leads to layoffs … unemployment can pretty quickly build up.”

“So yes, I think concern is warranted,” he added.