Canada’s

unemployment rate

rose to 6.7 per cent in February as more people looked for work and the economy

shed 84,000 jobs

, according to the latest report from

Statistics Canada,

released Friday.

The country’s employment rate fell 0.2 percentage points to 60.6 per cent, the second consecutive monthly decline and a hair above the recent low of 60.5 per cent recorded in August 2025.

The participation rate — the proportion of the population aged 15 and up who were employed or looking for work — fell by 0.1 percentage points to 64.9 per cent in February and was down 0.4 percentage points compared to a year ago.

Nearly 23 per cent of the 1.5 million people who were unemployed in February were in long-term unemployment and had been continuously searching for work for 27 weeks or more. Statistics Canada said that percentage was little changed from a year ago, but “significantly above” the pre-COVID-19 pandemic average of 17.1 per cent recorded during 2017-19.

Economists had been expecting a gain of 10,000 jobs in February but the numbers were “weaker than expected,” said Andrew Hencic, director and senior economist at TD Economics, in a note.

He said Canada’s economy is struggling to gain traction, something that was expected given the “structural changes” it is facing.

“Looking forward, we are expecting the labour market to tread water in 2026, as a rapid slowdown in population growth drags on labour supply, and soft economic momentum limits hiring,” he said.

Most of the job losses (57,000) came from Quebec, where employment declined 1.2 per cent in February — the highest decrease in the country and the most significant drop in the province in four years. Employment was also down in British Columbia, Saskatchewan and Manitoba, while there was little change in other provinces.

Employment dropped in both services-producing and goods-producing industries, which lost 56,000 and 28,000 positions, respectively.

Wholesale and retail trade had the most job losses, with 18,000 fewer people working in the sector, while “other services,” such as personal and repair services, shed 14,000 jobs and construction lost 12,000 jobs.

The number of manufacturing positions declined by 9,200 last month. Year over year, the sector shrunk 2.8 per cent and lost 52,000 jobs.

The youth unemployment rate rose from 12.8 per cent in January to 14.1 per cent in February, which Statistics Canada noted is close to the 14.6 per cent recorded in September 2025, the highest in 15 years (outside of the 2020-21 pandemic). Meanwhile, youth employment fell 1.7 per cent.

The 0.6 per cent decline in full-time jobs in February erased gains from the previous two months, and part-time jobs were unchanged. Private sector employment was down for the second month in a row with a 0.5 per cent decline, while numbers for the public sector and self-employed were little changed.

Average hourly wages were up by 3.9 per cent year-over-year in February, up from the 3.3 increase in January.

Looking forward, Hencic said the “wildcard” is how big the inflation shock from the ongoing conflict in the Middle East will be.

“The duration of the supply disruption remains highly uncertain, but its length will impact inflation and, thereafter, consumer spending and the economy at large,” he said.

Bradley Saunders, North America economist at Capital Economics Ltd., said in a note that February’s employment slump puts the economy on track for 0.5 per cent annualized growth for the first quarter of 2026, weaker than the 1.8 per cent gain forecasted by the Bank of Canada.

The central bank’s next interest rate decision comes next week, on March 18. At its last announcement on Jan. 28, the bank held its benchmark rate at 2.25 per cent.

“The rebound in the unemployment rate to 6.7 per cent in February supports our view that, despite the surge in oil prices, the Bank of Canada will be reluctant to discuss a potential return to rate hikes this year,” Saunders said.

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