Canada: April Labour Market Cooling, Not Cracking

Canadian employment slipped by 18k in April, rewinding March’s gains. All net job losses in April were driven by a decline in full‑time employment (‑47k), while part-time positions saw a 29k gain (graph 1). While employment remained 0.3% higher year over year, it fell by a cumulative 112k jobs over the first four months of 2026.

Employment declines in April were concentrated in information, culture and recreation (‑25k), construction (‑16k), and transportation and warehousing (‑10.5k). Healthcare posted another gain (+17.5k), remaining the only sector to record a notable growth in employment on a year-over-year basis.

The participation rate rose by 0.1 percentage points to 65.0% in April, driven by higher participation among core‑aged workers, though it remained 0.3 percentage points below its level a year earlier, reflecting higher retirements.

A dip in employment alongside higher participation pushed the unemployment rate up to 6.9% in April, its highest level since October 2025, though still below last year’s peak of 7.1%.

The rise in unemployment appears driven more by softer hiring than by layoffs. The layoff rate held at 0.6% in April, in line with its pre‑pandemic average and showing no recent upward trend. Long‑term unemployment was little changed both month over month and relative to a year earlier (graph 2).

Regional disparities remain pronounced (graph 3). Employment in Quebec is down 87k jobs so far in 2026, with losses concentrated in Montreal. British Columbia has recorded a net loss of 40k jobs year-to-date, while Ontario is down 27k overall, despite a sizeable job gain in April (+42k). Alberta has seen modest growth, adding 26k jobs year to date.

Average hourly wage growth remained elevated at 4.5% year over year in April. The recent firmness in headline wage growth largely reflects compositional effects, while constant‑composition wage growth held around 3.4% y/y, broadly in line with its 2025 average. Nevertheless, wage gains should continue to outpace inflation.

As the energy shock is beginning to filter through the economy, uncertainty surrounding the Iran ceasefire—potentially persisting for some time—poses upside risks to both growth and inflation, albeit with uneven regional effects. Changes to US tariffs on metal products External link. weigh on activity in some regions and sectors, adding to existing headwinds. April’s labour market data continue to point to building slack, which should dampen price pressures and partially offset inflationary passthrough from higher energy prices, providing room for the Bank of Canada to remain on the sidelines ahead of the upcoming joint CUSMA review External link..