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RBC Previews This Week's Jobs Report in Canada

BY MT Newswires | ECONOMIC | 06:42 AM EST

06:42 AM EST, 02/02/2026 (MT Newswires) -- Canada is scheduled to release the Labour Force Survey (LFS) for January on Friday, said RBC.

The bank expects the LFS to show a tick-down in the unemployment rate to 6.7%, after an increase to 6.8% in December that partially reversed an unusually large 0.5 percentage point decline over the prior two months. Employment is expected to have declined by 10,000 in January -- after the outsized 189,000 increase between September and December 2025.

Canadian labor market data is "notoriously" volatile month-to-month, but slower population growth is also sharply reducing the amount of job growth needed to absorb new workers into the workforce, stated RBC. A 9,900 increase in population in December was the smallest gain since the COVID-19 pandemic (December 2020) and the second smallest rise dating back to 1976.

The bank also thinks a partial reversal of a jump in the December participation rate will result in a pull-back in available labor in January.

RBC estimates these underlying structural trends to persist -- on average -- this year. Slower population growth and an aging population mean even small declines in job counts in 2026 would be consistent with a steady to declining unemployment rate.

Looking ahead, Canadian firms' hiring intentions remained subdued, according to the latest Bank of Canada Business Outlook Survey -- and most business survey data is suggesting wage growth will edge lower. Job postings from Indeed.com, however, paint a more optimistic picture with hiring demand rising since September 2025 to levels close to the pre-tariff peak in January 2025, pointed out the bank.

Sectors heavily exposed to international trade disruptions, such as manufacturing, continue to underperform, but RBC continues to expect a stabilizing trade backdrop and strength in domestic demand will support a rebound in hiring overall. The bank looks for the unemployment rate to edge gradually lower to 6.3% by the end of this year.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.

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