Canada’s labour market lost a net 83,900 jobs in February and the unemployment rate increased to 6.7 per cent, driven by a substantial decline in full-time positions, according to Statistics Canada data released on Friday.

The results were far below the slight job gain forecast by economists. The employment rate — the share of the population aged 15 and older who are working — fell 0.2 percentage points to 60.6 per cent, marking a second consecutive monthly decline and leaving it just above a recent low reached last summer.

In a note to clients, BMO chief economist Douglas Porter calls the February Labour Force Survey (LFS) data “a simply brutal result,” noting that it “ranks as one of the worst (non-pandemic) months ever for jobs.“ He declares the report “weak almost from head to toe” and points to “a near absence” of net job growth in the last 12 months.

“Somehow, the market continues to price in Bank of Canada rate hikes for later this year, but if this employment report is at all indicative of underlying economic conditions, the last thing the Bank would be considering would be rate hikes,“ Porter concluded.

The February numbers suggest “a worrisome turn” for Canada’s job market, CIBC economist Katherine Judge wrote, with a loss of 108,000 full-time jobs — 73,000 of those in the private sector.

“Overall, this is clearly a very worrisome report for the [Bank of Canada] that shows that labour market slack has increased and activity is frozen amidst trade uncertainty,“ she said.

Indeed Canada senior economist Brendon Bernard also notes the report’s weakness, while cautioning that the LFS has swung above and below forecasts with unusual frequency in recent months.

“The LFS is quite volatile: 2026 started weak, but it followed a surprisingly strong stretch to end 2025,” Bernard said in an emailed statement. “At least some of the recent slip appears to be a direct reversal of that earlier strength. Youth employment rates in particular have fallen back to their September levels after bouncing up towards the end of the year. To the extent that the previous strength was exaggerated, the trend has returned back to the mean.“

There were 47,000 jobs lost among youth aged 15 to 24, bringing the youth unemployment rate up 1.3 percentage points to 14.1 per cent, which Statistics Canada notes is “closer to the recent high of 14.6 per cent reached in September 2025.“

Average hourly wages rose 3.9 per cent compared with a year earlier. However, Desjardins Group economist Royce Mendes warns that the increase appears driven by composition effects, as job losses were concentrated in lower-paid positions, “which mechanically pushes up the average wage reading.“

By sector, the largest declines were in services-producing industries (down 56,000 jobs; a minus 0.3 per cent drop from January), and goods-producing industries (down 28,000; a minus 0.7 per cent drop). Judge declares the job losses “widespread across industries.”

The downturn was felt most acutely in Quebec, where employment plunged by 57,000. This marks the province’s first significant employment decrease since early 2022 and pushed its unemployment rate up 0.7 percentage points to 5.9 per cent. British Columbia also saw a notable drop of 20,000 positions. Manitoba’s unemployment rate fell by 0.6 percentage points to 5.7 per cent, driven not by job gains but by people leaving the workforce.

That same, seemingly paradoxical outcome was seen nationally in January, when Canada lost 24,800 jobs but the unemployment rate improved from 6.8 to 6.5 per cent. That was due to a significant drop in the workforce — 119,000 people overall — as population growth slowed and the proportion of the working-age population actually working or seeking employment fell.

The report also highlights persistent disparities as the country marked International Women’s Day. While the gender wage gap has narrowed over the long term, women in Canada still earned an average of $0.88 for every dollar earned by men in February. Among core-aged workers, women were more than twice as likely to work part-time as men, with nearly one-quarter of those women citing childcare responsibilities as the primary reason.

Hiring in the months ahead will be further complicated by uncertainty around the war in Iran. That crisis, in addition to uncertainty around the future of the Canada–U.S.–Mexico Agreement, means “the economic environment is no longer stable, with many companies halting expansion plans, including hiring,” says Willson Cross, CEO of payroll solution startup Borderless AI.

“Companies are in a wait-and-see mode and will likely remain there until we get further clarification on how recent events will impact various industries,” he said.

Looking forward, “employment will be impacted by further layoff announcements, particularly in sectors hit by U.S. tariffs,” BMO economist Shelly Kaushik wrote in a recent note.

“Notably, public sector employment is also set to step down from elevated levels (as Ottawa attempts to trim department spending), although there will be some offsetting hiring in the coming months as StatCan conducts its 2026 Census.”

John MacFarlane is a senior reporter at Yahoo Finance Canada. Follow him on X @jmacf.

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