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Labour Market Recovery in Motion

Canadian Economics

By: Maxime Arseneau

    

Employment rose by 54,000 in November (0.3 per cent). The labour force participation rate edged down to 65.1 per cent, while the unemployment rate declined to 6.5 per cent. On a year-over-year basis, average hourly wages increased by 3.6 per cent.

  • Employment in goods-producing industries increased this month (+11,000), driven by gains in primary goods (+11,400) and construction (+6,200).
  • Job gains for there month were led by services (+42,800), driven by gains in healthcare (+45,500), accommodation (+14,200) and information and culture (+11,100).
  • The wholesale and retail trade industry experienced a notable decline (–34,100) after recording strong gains since January.
  • Provincially, Alberta led job gains (+28,700) followed by British Columbia (+6,200), Ontario (+6,100), New-Brunswick (+5,500) and Manitoba (+4,500). Employment levels in the other provinces were largely unchanged from October.
  • While the overall job gains are positive, they were skewed in part-time jobs (+148,100), while full-time jobs declined (–27,900)

Key insights

Canada’s labour markets have been on the rebound since September, following eight months of anemic performance. Employment is now up 142,100 since January.

While recent job gains have been concentrated in part-time positions, this is still good news. The labour-market slowdown since 2024 has disproportionately affected young workers—particularly students in part-time roles and recent graduates. November LFS data show the employment rate for those aged 15–24 rising to 55.3 per cent, its highest level since February 2024. The unemployment rate for this cohort has also eased to 12.8 per cent, down from January.

We expect the labour market to continue recovering over the next few months. Trade-related uncertainty has passed its peak, and although consumer and business confidence remain subdued, we anticipate modest improvements in economic conditions in the near term, helping hiring demand to pick up heading into 2026.

However, the nature of labour-market challenges will shift as we move into 2026, clouding the overall recovery. With trade tensions fading, changing migration patterns will become the dominant structural force. In its latest budget, the federal government reaffirmed its goal of reducing the share of non-permanent residents to 5per cent by 2027. Although population growth slowed markedly in 2025, migration targets were largely missed, leaving the non-permanent resident share at 7.1 per cent. Achieving the target will therefore require a sharper demographic adjustment over the next two years. This will shrink the labour force and have significant implications across the country. We expect employment growth to become increasingly constrained, even as the unemployment rate gradually declines and labour shortages re-emerge in some sectors.

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