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Macquarie Sees "Gradual" Improvement in Canada's Labor Market; Anticipates Bank of Canada Hike in Q4 2026

BY MT Newswires | ECONOMIC | 07:56 AM EST

07:56 AM EST, 02/09/2026 (MT Newswires) -- Employment in Canada decreased by 25,000 jobs in January following four consecutive months of gains, said David Doyle, head of economics at Macquarie Group, after Friday's Labour Force Survey (LFS).

Despite this, the unemployment rate declined to 6.5% as participation weakened. Actual hours rose sharply (+0.6% month over month), reflecting strong full-time jobs gains -- these were more than offset in the headline number by part-time job declines, noted the economist.

Macquarie anticipates a gradual improvement in the labor market. Critically, very low -- or negative -- population growth has sharply lowered the employment breakeven in Canada, making a further decline in the unemployment rate likely over time.

Doyle's view for the Bank of Canada is unchanged on these data. Macquarie continues to believe the rate-cutting cycle is complete and that the next move will be a hike, with the baseline timing of Q4 2026.

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

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