A worker assembles a snow plow at Arctic Snowplows in London, Ont., in December.GEOFF ROBINS/AFP/Getty Images
Statistics Canada says a boost in the number of people looking for work in December drove the unemployment rate higher at the end of the year.
The agency said the economy added 8,200 jobs last month, topping economists’ expectations.
The unemployment rate rose to 6.8 per cent in December, Statscan said, up from 6.5 per cent in November.
The data showed job gains in Ontario and Quebec last month did not keep pace with labour-force growth in both provinces, driving the jobless rate higher in those jurisdictions. Statscan’s definition of unemployment captures anyone who’s not working but can work and is looking for a job.
RBC assistant chief economist Nathan Janzen said more people entering the labour force is an “encouraging development.”
While more job seekers can push up the unemployment rate, the increase suggests that Canadians who were on the sidelines of the labour market now feel more optimistic about their ability to find work.
Janzen said what would be more worrying is “if there were a lot of, say, discouraged workers that were giving up their job search.”
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December’s job gains were concentrated in full-time work, Statscan said, and the health care and social assistance sector led growths with 21,000 positions added in December. Also seeing increases were the construction industry and “other services” – a broad category that includes professions from hairdressers to auto mechanics.
The professional, scientific and technical services sector meanwhile shed 18,000 positions to end the year, and the accommodation and food services industry also faced losses.
The trade-sensitive manufacturing sector added 4,300 jobs in December.
Average hourly wages rose 3.4 per cent year-over-year in December, cooling from 3.6 per cent in November.
Economists polled by Reuters had expected the economy would shed 5,000 positions in December, giving back some of the 181,000 jobs added in the previous three months.
Statistics Canada said the labour market faced headwinds from U.S. tariffs through much of 2025 but conditions improved for job seekers toward the end of the year.
Janzen said that while trade-sensitive industries are still coping with tariffs, there are signs of stabilization in those sectors.
“The labour market ended the year better than was feared earlier in the year when U.S. tariff threats and actual tariffs got implemented,” he said.
Statistics Canada noted that youth in particular faced a tough job prospects this past year.
Young workers aged 15 to 24 accounted for 27,000 job losses in December, erasing some gains seen in November and October.
Statscan said the youth jobless rate rose half a percentage point to 13.3 per cent to end 2025. That figure was down from 14.7 per cent recorded in September, a 15-year high outside the COVID-19 pandemic.
Friday’s jobs report marks the Bank of Canada’s last look at the state of the labour market before its first interest rate decision of the year at the end of this month.
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BMO chief economist Doug Porter said in a note to clients that December’s job figures likely reflect the labour market’s reality better than the previous months of outsized job gains that caught most economists off-guard.
He said last month’s “moderation” likely won’t move the Bank of Canada from the sidelines and supports BMO’s view that the central bank will keep its benchmark interest rate on hold through 2026.
The Bank of Canada held its policy rate steady at 2.25 per cent in its final decision of the year last month. Governor Tiff Macklem said at the time that monetary policy-makers see the rate at “about the right level” to keep inflation under control while giving a bit of support to the economy.
TD Bank senior economist Andrew Hencic also said in a note that Friday’s report is “unlikely to move the needle for the Bank of Canada.” Uncertainty in the economy and lingering inflation risks should keep the central bank from lowering its rate any further, he argued.
Janzen said previous rate cuts from last year are still feeding through the economy, and planned increases in spending from the federal government in particular should give a lift to the labour market in 2026.
“We still expect the Bank of Canada to remain humble the rest of this year and to defer on adding further stimulus,” he said.