OTTAWA — Harsh winter weather put a chill on Canada's labour market in February as employers braced for headwinds from the looming trade dispute with the United States.
Statistics Canada said Friday that the Canadian economy added just 1,100 jobs last month, falling short of economists' expectations and well below the 76,000 jobs added in January.
February’s modest gains were enough to keep the unemployment rate steady at 6.6 per cent as the Canadian population grew at its slowest monthly pace since April 2022.
Brendon Bernard, senior economist at job site Indeed, said in an interview that stability in the unemployment rate is a clear sign that Canadian employers were not turning to layoffs en masse ahead of looming tariffs from the United States.
“There's potential trouble ahead for the job market, but that's not what we saw in February," Bernard said.
U.S. President Donald Trump's tariffs finally arrived on March 4 — some have already been scaled back — with more trade salvos threatened in the days and weeks ahead.
Ottawa on Friday unveiled a $6-billion support package aimed at supporting businesses through the U.S. trade disruptions.
A series of major snowstorms in Central and Eastern Canada last month meant 429,000 Canadians lost hours of work, StatCan said, more than four times the five-year average for the figure in February. Total hours worked dropped 1.3 per cent last month, the largest monthly decline since April 2022.
TD Bank director of economics James Orlando said in a note to clients Friday that the harsh winter weather was the "likely culprit" for Canada's weak labour market results in February, but added that fears of the impending tariffs may have also started to bleed into the data.
"Luckily, the Canadian labour market came into the current tariff crisis on solid footing, which is important given the significant headwinds the economy is facing," he said.
StatCan's figures show a loss of 19,700 full-time roles in February, offset by a gain of 20,800 part-time jobs.
Job growth last month was led by the wholesale and retail trade sectors and the finance, insurance, real estate, rental and leasing industries.
Those gains were offset by losses in professional, scientific and technical services and transportation and warehousing.
Canada’s manufacturing industry, which led job gains in January, contracted by 4,800 positions in February. Ontario was an outlier from the losses, adding another 10,800 manufacturing jobs in the month and nearly matching January's gains.
Bernard said the manufacturing industry is one of the key barometers for anticipated impacts from tariffs on Canada's economy.
While the data to date does not show the sector bleeding jobs, Bernard said listings for manufacturing and production jobs on Indeed fell seven per cent in February, suggesting a slowdown in hiring ahead.
“The clouds are still, I think, on the horizon, rather than the storm raging today," he said.
Friday’s jobs report is the last major data release the Bank of Canada will see before its next interest rate decision on March 12.
Financial markets were largely tilted toward a quarter-point cut, according to LSEG Data & Analytics. Before tariffs went ahead, markets were showing the odds of a hold or cut were essentially a toss-up.
CIBC Capital Markets senior economist Andrew Grantham said in a note that February's hiring stall, combined with a looming economic hit from the trade war, should tip the Bank of Canada toward another quarter-point cut next.
Economists at RBC believe it will be a very close call for the Bank of Canada.
RBC is sticking with its call for a rate hold on Wednesday, but assistant chief economist Nathan Janzen said in an email that the odds of a cut are roughly 50-50 from his point of view and "could easily be swayed one direction or another" based on developments in the days leading up to the decision.
This report by The Canadian Press was first published March 7, 2025.
Craig Lord, The Canadian Press
