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Business Environment Profiles - Canada

National unemployment rate

Published: 27 January 2025

Key Metrics

National unemployment rate

Total (2025)

7 %

Annualized Growth 2020-25

-7.2 %

Definition of National unemployment rate

The unemployment rate measures the proportion of Canadians aged older than 15 who are currently unemployed and looking for work. This measure does not account for individuals who have given up searching due to a lack of opportunities or otherwise. The data presented in this report is annual averages based on unadjusted monthly data and is sourced from Statistics Canada.

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Recent Trends – National unemployment rate

Overall, the Canadian labour market has performed well in recent decades. For instance, unemployment rates declined every year between 2003 and 2007, with this metric falling from 7.7% in 2002 to a low of 6.1% in 2007. This boom was largely driven by robust housing and energy sectors, which stimulated steady job growth in the country. However, as the United States entered a recession, the Canadian economy was hurt by a sharp drop in demand for Canadian exports. Economic growth slowed and unemployment shot up a substantial 2.2 percentage points in 2009 alone. The Canadian economy slowly began to recover in the years immediately following the global financial crisis, driven by the strong performance of the energy sector. As a result, the national unemployment rate declined from 8.4% in 2009 to 7.3% in 2012. In December 2013, Canada lost 45,900 jobs, which kept the unemployment rate at 7.1%. This job loss can be attributed to significant cuts at several major Canadian corporations. Canada also suffers from some structural labour mobility problems, with provinces having different worker certification standards.

Over the past five years, the unemployment rate in Canada has dropped to its lowest point in more than 40 years, as significant job growth in healthcare, transportation and warehousing, education services and other service-based sectors have substantially reduced the ratio of unemployed individuals in the Canadian labour market. Much of the decline during the five-year period has occurred in recent years, as a sizable decline of 0.6 percentage points occurred in 2017 specifically. This decline in labour market slack continued in 2018, as the unemployment rate declined an additional 0.6 percentage points in 2018 and 0.2 percentage points in 2019. However, the second half of 2019 saw upward tick in consumer insolvencies and a contraction in private-sector jobs, which was offset by public sector hiring.

The rapid onset of the COVID-19 outbreak and ensuing measures to contain the virus had devasting effects on the services side of the economy. As a result, the unemployment rate spiked sharply in Q2. In particular, the hospitality, tourism and airlines industries have seen massive layoffs. Generally, businesses that are deemed to be non-essential have also been severely affected, resulting in further layoffs. This trend reversed rapidly in Q3 as people went back to work, but slowed due to long-term economic damage stemming from the pandemic as well as ongoing closures amid the onset of new variants. Overall, the average annual unemployment rate in 2020 was 9.7%, the highest since 1996. Labour conditions began to improve beginning in 2021, as vaccines were rapidly distributed, enabling economic activity to resume, though the unemployment rate remained high in comparison to the last five years. As border and travel restrictions eased, key sectors in the Canadian economy are expected to drive improvement in the unemployment rate.

Despite recessionary fears over rising inflation, the unemployment rate was reduced significantly in 2022 as labour supply was outpaced by demand from the sharp economic recovery. A strong labour market in the first half of 2023 is bucking the trend anticipated by the Bank of Canada, which translated to a slight increase in the unemployment rate for the year. However, similar to the US, the labor market cooled off in 2024, leading to unemployment growth of 18.4%. This drove the Bank of Canada to implement five consecutive rate cuts during the year, which will help to limit the growth of unemployment in 2025.

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5-Year Outlook – National unemployment rate

The Bank of Canada's rate cuts will continue to aim to stimulate economic growth by reducing borr...

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