Canada’s employment increased by 53,600 jobs in December 2025, according to the latest release from the Sigmanomics database. This figure notably surpassed market expectations of a 5,000-job decline and followed a strong 66,600 gain in November. The labor market continues to demonstrate resilience despite persistent headwinds from monetary tightening and global economic uncertainties.

Drivers this month

• Service sector added approximately 35,000 jobs, led by healthcare and education.
• Manufacturing employment rose by 8,000, reflecting modest industrial recovery.
• Construction jobs increased by 5,500, supported by ongoing infrastructure projects.
• Temporary layoffs declined, indicating improving job stability.

Policy pulse

The employment growth remains above the neutral threshold relative to the Bank of Canada’s inflation target of 2%. The steady job gains suggest the labor market is still tight, which may sustain wage pressures and influence the central bank’s cautious stance on further rate hikes.

Market lens

Immediate reaction: The Canadian dollar (CAD/USD) strengthened by 0.30% within the first hour post-release, while 2-year government bond yields rose 5 basis points, reflecting renewed confidence in economic momentum.

Employment change is a core macroeconomic indicator reflecting labor market health and economic vitality. The December print of 53.60K jobs contrasts with the average monthly gain of 22.30K over the past 12 months, signaling above-trend growth. The unemployment rate held steady at 5.10%, near historic lows, while the participation rate ticked up to 65.80%, indicating more Canadians are entering the workforce.

Historical comparisons

• December 2024 saw a gain of 48.20K jobs, slightly below this year’s figure.
• August 2025 recorded a sharp decline of -40.80K, highlighting volatility earlier this year.
• July 2025’s peak gain of 83.10K remains the strongest monthly increase in the past year.

Monetary policy & financial conditions

The Bank of Canada has maintained a restrictive monetary policy stance since mid-2024, with the policy rate at 5.25%. Despite this, employment growth remains robust, suggesting a lag in monetary transmission. Financial conditions have tightened, but credit availability remains sufficient to support business hiring.

Fiscal policy & government budget

Federal fiscal policy continues to focus on targeted stimulus in infrastructure and social programs. The 2025 budget projects a modest deficit of 1.20% of GDP, balancing support for growth with fiscal prudence. Employment gains in public sectors reflect these investments.

Market lens

Immediate reaction: The CAD/USD currency pair appreciated 0.30%, while 2-year government bond yields climbed 5 basis points, reflecting market optimism about sustained economic growth and labor market strength.

Looking ahead, Canada’s employment trajectory faces a mix of supportive and challenging factors. The labor market’s resilience suggests continued moderate job growth, but risks from global geopolitical tensions and tighter financial conditions could slow momentum.

Bullish scenario (30% probability)

• Employment growth accelerates to 60-70K monthly as global demand strengthens.
• Wage growth supports consumer spending, boosting domestic demand.
• Monetary policy stabilizes, reducing borrowing costs and encouraging investment.

Base scenario (50% probability)

• Employment growth moderates to 30-50K monthly, consistent with trend labor force expansion.
• Monetary tightening gradually slows hiring but does not trigger layoffs.
• Fiscal stimulus offsets external shocks, maintaining steady growth.

Bearish scenario (20% probability)

• Geopolitical risks or financial market shocks cause job losses of 10-20K monthly.
• Rising inflation pressures force more aggressive rate hikes, dampening hiring.
• Consumer confidence weakens, reducing labor demand.

Canada’s December employment data confirms a labor market that remains robust despite tightening monetary policy and external uncertainties. The 53.60K job gain surpasses expectations and signals ongoing economic resilience. However, the moderation from earlier peaks and persistent global risks counsel caution. Policymakers and investors should monitor wage trends, participation rates, and geopolitical developments closely to gauge the sustainability of this momentum.

Balancing upside potential with downside risks, the employment outlook suggests steady growth but underscores the need for vigilance amid evolving macroeconomic conditions.

Key Markets Likely to React to Employment Change

Employment data is a critical driver for several Canadian and global markets. The labor market’s strength influences currency valuations, bond yields, and equity sectors sensitive to economic cycles. Below are five key tradable symbols that historically track or react to Canada’s employment changes:

• RY – Royal Bank of Canada, sensitive to economic growth and credit demand.
• CADUSD – Canadian Dollar vs. US Dollar, directly impacted by employment-driven monetary expectations.
• ENB – Enbridge Inc., linked to energy demand and infrastructure spending.
• BTCUSD – Bitcoin, often reacts to risk sentiment shifts influenced by economic data.
• EURCAD – Euro vs. Canadian Dollar, sensitive to cross-border economic divergences.

FAQs

What does the Employment Change report indicate?

The Employment Change report measures the net number of jobs added or lost in Canada monthly, reflecting labor market health and economic momentum.

How does employment data affect monetary policy?

Strong employment growth can lead to wage pressures and inflation, influencing the Bank of Canada’s decisions on interest rates.

Why is the Employment Change important for investors?

Employment trends impact currency values, bond yields, and equity markets, guiding investment strategies and risk assessments.

Key takeaway: Canada’s labor market remains a pillar of economic strength, but vigilance is essential as global and domestic risks evolve.