Canada ended 2025 with signs of a softer job market. The unemployment rate rose to 6.8% in December, as employment remained almost unchanged, reflecting that more people were looking for work while hiring failed to keep pace.
Employment edged up by just 8,200 jobs, essentially flat after stronger gains earlier in the fall. The employment rate stayed at 60.9%, a level that has not recovered when population growth is considered. The small headline change hides growing pressure beneath the surface.
Unemployment rose because more people entered the job search. The number of unemployed Canadians increased by 73,000 to about 1.6 million. The participation rate climbed to 65.4%, meaning more people were either working or actively looking for work.
Young people were hit hardest. Employment among those aged 15 to 24 fell by 27,000, and the youth unemployment rate increased to 13.3%.
Employment for people aged 55 and older rose by 33,000, continuing a trend of higher participation among older Canadians, which reflects demographics and financial pressure, but it also highlights a widening gap between age groups.
Job growth was limited to a few sectors. Health care and social assistance added 21,000 jobs, while personal and repair services gained 15,000. Losses were recorded in professional, scientific and technical services, accommodation and food services, and utilities. Weakness in professional services often signals caution among employers.
Provincial results were mixed. Quebec added 16,000 jobs, while Alberta lost 14,000 as a result of population growth, and Saskatchewan lost 4,000.
Wage growth continued to slow. Average hourly wages rose 3.4% from a year earlier to $37.06, slightly below November’s pace. While wages are still rising faster than inflation, the trend points to a cooling labour market.
Overall, December’s data suggest Canada is entering 2026 with less momentum. Employment is no longer growing fast enough to absorb new job seekers, and unemployment is rising as a result.