National unemployment rate

The Canadian labour market in 2025 is characterized by heightened challenges, with a lower vacancy rate and a rapidly rising population base generating complexity in job prospects, particularly for recent graduates and new entrants seeking economic opportunity. Ongoing inflation and a cost-of-living crisis have limited consumer spending growth and restrained private sector expansion. These economic headwinds and constrained banking activity have subdued employment creation across most provinces, driving the national unemployment rate up 10.1% to approach 7.0%.

Key trends during 2020 to 2025 include unprecedented volatility, underpinned by the COVID-19 pandemic's initial shock and subsequent rapid adjustments in labour demand. The sharpest employment losses were observed in hospitality and travel, which contributed to the annual unemployment rate reaching 9.7% at the pandemic's peak. Large-scale vaccination efforts and the gradual lifting of public health restrictions led to robust job recovery from 2021 onward, fueled in part by sustained growth in healthcare, education, warehousing, and transportation. While post-pandemic recovery tightened the labour market and pushed unemployment downward, inflationary pressures and a wave of consumer insolvencies began weighing on household finances by the middle of the decade. Private sector job creation slowed, while the public sector absorbed some of the slack. Bank of Canada interventions through monetary easing responded directly to these headwinds and to risks such as US tariff policy, aiming to stabilize employment despite uncertainty.

Additional macro trends shaping labour performance over this five-year span include persistent interprovincial labour mobility barriers due to varying certifications and regulation and the shifting weight of service sectors within the economy. The period exposed the workforce's vulnerability to external shocks and highlighted public policy's central role. Despite a moderating economic backdrop, stability in healthcare and select service sectors helped to limit further spikes in unemployment and preserved underlying resilience in the labour market, culminating in unemployment falling at a 6.4% compound annual rate over these years.