Canada: Labour outlook stabilizing with gradual improvement – RBC

Royal Bank of Canada’s (RBC) Nathan Janzen notes that Canadian labour market conditions steadied in March, with a modest employment gain and an unemployment rate holding at 6.7%. He highlights that softer labour force growth, driven by stalled population growth and aging demographics, is helping unemployment drift lower. RBC remains cautiously optimistic that per-person economic growth and labour conditions will gradually improve through 2026.

Labour force dynamics support lower unemployment

"The first increase in employment of the year in Canada in March (+14k) retraced little of the cumulative 109k drop over January and February."

"But per-worker labour market conditions showed further signs of stabilization with the unemployment rate holding at 6.7% -- still above the 6.5% rate in January but below the 6.8% level in December and the recent peak 7.1% rate in September 2025."

"The (gradual and choppy) drift lower in the unemployment rate since September has been, mechanically, tied as much to softer labour force growth as to stronger hiring -- Canada's labour force has declined by 39k workers over the last 6 months compared to an 42k increase in employment."

"But that labour market decline has more to do with stalled population growth and an aging population rather than a 'distortion' like discouraged workers giving up their job searches."

"Looking ahead, the economic growth backdrop still faces headwinds."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)