Canada’s economy added 14k jobs in March (+0.1% m/m), more-or-less in line consensus expectations for a 15k gain. Employment was essentially flat across job types, with full-time employment edging down slightly (-1k) while private-sector employment rose by 15k on the month.
The unemployment rate was unchanged at 6.7% after February’s increase. The labour force grew by 15k in March, while the participation rate was unchanged at 64.9%. Importantly, the layoff rate is in line with pre-pandemic values, while 15.2% of February’s unemployed found work in March, in line with the rate in 2025 (14.7%), but below the 19.1% recorded in the same months in 2017-2019. The data suggest that the high unemployment rate is “mostly driven by slower hiring, rather than by increased layoffs.”
Job gains were concentrated in “other services” (+15k) and natural resources (+10k), while finance, insurance, real estate, rental and leasing posted the largest decline (-11k).
Wage growth firmed further, with average hourly wages up 4.7% year-on-year (y/y) in March, accelerating from 3.9% in February. However, wages were lifted by the changing composition of the workforce. Holding the composition of employment fixed, average hourly wages were up 3.6% y/y, in line with January and February 2025.
Key Implications
The labour report came in as expected, showcasing the lack of dynamism in the Canadian labour market. The unemployment rate remains elevated, with the lack of hiring showcasing the general apprehension in the economy. With the economy continuing to progress in fits and starts, and uncertainty sky-high, the outlook is for subdued job growth and a steady unemployment rate.
The outlook remains fraught, with the energy shock beginning to be felt in the economy, and no clarity on the direction of the conflict. How long the conflict lasts and energy supplies remain disrupted, will determine the size of the inflation shock. For now, weak demand conditions should provide some offset to inflationary pass-through, allowing the Bank of Canada to stay on the sidelines and wait to see how things play out.
