By Promit Mukherjee
OTTAWA (Reuters) -Canada’s unemployment rate held steady at 6.6% in February while new job additions were only marginally up, data showed on Friday, reflecting the early potential impact of uncertainty over U.S. tariffs on corporate hiring decisions.
The economy added a net of 1,100 jobs, Statistics Canada said, a sharp contrast to the addition of 76,000 jobs in January and a cumulative increase of 211,000 from November to January.
Analysts polled by Reuters had estimated the unemployment rate at 6.7% and net addition of 20,000 jobs in February.
This is the final major data to be released before the Bank of Canada’s monetary policy decision on March 12. Currency swap markets are showing that there is an around 73% chance that the bank will cut interest rates for the seventh time in a row to 2.75%.
The Canadian dollar extended losses after the labor data, trading down 0.3% to 1.4339 versus the U.S. dollar, or 69.74 U.S. cents. Yields on two-year government bonds were down 3.9 basis points at 2.6%.
Canada’s unemployment rate has been improving from late last year since a peak of 6.9% in November, spurred by falling interest rates as inflation came within the Bank of Canada’s 1% to 3% target range and economic activity picked up.
However, uncertainty around U.S. tariffs has taken a toll on the hiring intentions of companies, Statscan’s data shows, and economists say unemployment could worsen if the tariffs are imposed.
U.S. President Donald Trump suspended for a month tariffs of 25% he had imposed this week on almost all Canadian imports.
WORKING AGE POPULATION GROWTH SLOWS
The employment rate, or the number of people employed out of the total population, was unchanged at 61.1%. This metric has been improving in the last few months even as the population growth rate has been slowing, showing an improving job market.
Growth in the working age population, those aged 15 and older, has slowed in recent months as Prime Minister Justin Trudeau’s government implemented immigration curbs, under pressure from opposition parties who blame migrants for the shortage and high prices of housing.
Population growth in February was 47,000, up 0.1%, which was less than half that recorded 12 months earlier and the slowest since April 2022.
The labor force – or the total number of people employed and unemployed – shrank by 16,800, the highest such drop since June 2022.
The participation rate, the proportion of the population who were employed or seeking jobs, fell to 65.3% in February, the first decrease since September 2024, the statistics agency said.
