Canada: Employment Holds Steady in March Following Early-Year Pullback

Canadian employment stabilized in March, up 14k jobs, after two consecutive months of decline. Full‑time and part‑time employment did not change, as were employment levels in private and public sectors. For the first quarter, employment declined by nearly 95k, with the private sector accounted for most of the net Q1 job loss (‑109k), while employment in other sectors remained broadly unchanged.

Employment continued to decline in finance, insurance and real estate (‑11.2k), accommodation and food (‑10.0k), and wholesale and retail trade (‑6.7k) in March. This was offset by recoveries in other services (+15.1k), professional services (+12.1), and natural resource (+10.3). On a year‑over‑year basis, health care and social assistance recorded the largest employment gain (+94k), while manufacturing posted the largest decline (‑44k).

Employment rebounded in Quebec in March after a sharp February decline, while BC recorded a second consecutive monthly drop. BC’s unemployment rate rose to 6.7%, its highest level since early 2016 outside of the pandemic period.

The national unemployment rate was unchanged in March at 6.7%, following a 0.2 percentage point increase in February, and was little changed on a year‑over‑year basis. The participation rate was unchanged at 64.9% in March, albeit down 0.4 percentage points from a year earlier.

Canada’s working‑age population (aged 15 to 64) fell in March, albeit at a slower pace (graph 1). Our latest analysis External link. suggests that tighter immigration targets could result in two consecutive years of population decline before growth resumes. However, achieving the government’s longer‑term population objectives is likely to be challenging.

Total hours worked rose 0.2% in March following a 1.1% decline in February, leaving quarter‑over‑quarter growth at ‑0.4% annualized (graph 2).

Average hourly wage growth accelerated to 4.7% year over year in March, its fastest pace since October 2024 (graph 3). Part of the acceleration reflects compositional effects, while constant-composition wage growth remained around 3.6% year over year, broadly in line with recent months. Wage gains should continue to outpace inflation, supporting real earnings growth.

Uncertainty surrounding the Iran ceasefire is keeping oil prices elevated, potentially for an extended period, posing upside risks External link. to Canada’s growth and inflation outlooks, albeit with different impacts across regions. However, continued labour market softness through Q1 gives the Bank of Canada room for patience ahead of the upcoming joint CUSMA review External link., which presents material downside risks to Canada’s growth trajectory.