Out with the new, in with the old? Canada’s job market looked stable in December, but the details tell another story. Statistics Canada’s (StatCan) Labour Force Survey shows flat headline employment, but the composition is shifting fast. Older workers and publicly-funded, non-market sectors are seeing substantial gains. Meanwhile, youth and market-based private sector jobs are being slashed. The result is a labour market that appears steady on the surface, but has cracks forming underneath.
Canadian Jobs Stall, Unemployment Surges Higher
Canadian employment was little changed last month. Employment was virtually flat with 8.2k jobs (0%) added to 21.14 million employed in December. While that might seem uneventful after three months of gains, the makeup signals problems are emerging. A point we’ll return to after discussing another unemployment shock.
The unemployment rate rose 0.3 percentage points to 6.8% in December. It marked the highest rate since August 2025, with the unemployed population now at 1.6 million after adding 73.0k people last month. This also marked the second-largest spike since April 2020, the onset of the pandemic, only behind November 2024. But unlike November, last month wasn’t accompanied by job gains to offset the impact.
Flat hiring alongside rising unemployment points to a labour mismatch. This mismatch becomes even clearer when looking at the sectors and demographic changes last month.
Canada’s Job Recomp: Government Spending Wins, Professionals Lose
Canada’s sectors that saw gains last month were almost entirely non-market. Health care (+21.0k jobs) and education (+10.5k jobs) led gains, together adding 4x more than the net job total. The gains in these sectors are largely fueled by public spending, and mask weakness in other areas. It represents demographic pressures, not economic strength.
Source: StatCan.
On the losing side: professional services (-18.0k jobs), accommodation & food (-12.0k), and finance, insurance & real estate (-10.0k). These are high-value, market-driven sectors—making their decline more troubling over the long-run.
The data points to a labour market tilting towards essential services, while private industry contracts under economic pressure.
Older Workers Dominate Job Gains As Youth Employment Falls
The demographic breakdown also reflected major changes, despite the flat headline. Workers 55 and older gained 33.0k jobs in December, accounting for 7x the headline’s net gain. It’s not often that being closer to the end of one’s career makes them more employable than the general population.
Meanwhile, youth employment fell by 27.0k jobs in December. It pushed the youth unemployment rate up to 13.3%, reversing just over half the improvements seen in recent months.
Canada’s job market appears steady on the surface, but the foundation is shifting. Older workers and non-market sectors are driving the gains, while young workers and market-based private industries account for losses. This isn’t a labour market set to grow, but one shifting into survival mode.
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