National unemployment rate

Unemployment is expected to decline modestly in 2026, with the rate falling 4.1% as several supportive factors take hold. Lower immigration will slow population growth, keeping the labour force relatively stable and limiting slack in the job market. At the same time, increased infrastructure spending and major public works will expand demand for workers across construction, engineering and related professional services. These projects will be supported by government funding programs and streamlined permitting, which will help projects break ground more quickly and sustain hiring throughout the year. Together, these trends will reduce unemployment in a stable interest rate environment and support moderate job growth.

Key trends during 2021 to 2026 include unprecedented volatility, underpinned by the COVID-19 pandemic's initial shock and subsequent rapid adjustments in labour demand. The sharpest employment losses were observed in hospitality and travel, which contributed to the annual unemployment rate reaching 9.7% at the pandemic's peak. Large-scale vaccination efforts and the gradual lifting of public health restrictions led to robust job recovery from 2021 onward, fueled in part by sustained growth in healthcare, education, warehousing, and transportation. While post-pandemic recovery tightened the labour market and pushed unemployment downward, inflationary pressures and a wave of consumer insolvencies began weighing on household finances by the middle of the decade. Private sector job creation slowed, while the public sector absorbed some of the slack. Bank of Canada interventions through monetary easing responded directly to these headwinds and to risks such as US tariff policy, aiming to stabilize employment despite uncertainty.

Additional macro trends shaping labour performance over this five-year span include persistent interprovincial labour mobility barriers due to varying certifications and regulation and the shifting weight of service sectors within the economy. The period exposed the workforce's vulnerability to external shocks and highlighted public policy's central role. Despite a moderating economic backdrop, stability in healthcare and select service sectors helped to limit further spikes in unemployment and preserved underlying resilience in the labour market, culminating in unemployment falling at a 2.5% compound annual rate over these years.