UBS Says Canada's January Jobs Report Overall Is "Not Great"

11:34 AM EST, 02/09/2026 (MT Newswires) -- Total Canadian employment declined 25,000 in January, with part-time employment slipping 69,700, offsetting a 44,900 rise in full-time employment, said UBS after Friday's Labour Force Survey (LFS).

The unemployment rate slipped back 0.3 percentage points to 6.5% in January, its lowest level since September 2024, largely on the back of a shift lower in labor-force participation, noted the bank. The decline in the unemployment rate does not reflect better-job market prospects and instead likely signifies search fatigue.

The January LFS painted a subdued picture for the Canadian labor market, stated UBS. Employment slipped, dragged on by a swing in part-time employment.

The decline in the unemployment rate reflected weaker participation in the labor market rather than improved job finding prospects. The share of long-term unemployed has been trending higher and moved up again in January, suggesting some fatigue in job search likely drove the shift lower in the unemployment rate, wrote the bank in a note to clients.

The pace of wage growth continued to moderate too. UBS is expecting that with population pressures to wane this year, and potential for fiscal support to help broaden growth somewhat, it could see a little more resilience in the Canadian labor market this year.

However, this isn't a "great" start, according to the bank. Friday's data supports UBS's expectation that the Bank of Canada remain on hold this year, keeping its policy rate at the lower end of its estimate of neutral to position policy, to support the economy in uncertain economic times.

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