Canada’s Labour Market Sends Mixed Signals for February 2026 Results

For employers, the labour market is becoming more balanced but not necessarily easier, particularly when recruiting specialized talent.

What the February 2026 Labour Force Survey Means for Employers

Canada’s labour market showed a sharp shift in February 2026, with job losses across several sectors and the unemployment rate rising. According to the latest  Labour Force Survey from Statistics Canada, the Canadian economy lost 83,900 jobs in February, pushing the national unemployment rate to 6.7%.

While the headline numbers suggest a cooling labour market, a deeper look reveals a more complex picture for employers navigating hiring, retention, and workforce planning in Canada.

The shift is also occurring amid broader economic uncertainty, including geopolitical tensions, global trade negotiations, and ongoing conflicts in Europe and the Middle East. These factors are influencing business confidence and hiring decisions across many industries.

Hiring is Slowing

February’s decline follows a softer labour report in January, when Canada lost roughly 25,000 jobs.

Combined, the first two months of 2026 represent a loss of more than 100,000 jobs, reversing a portion of the employment gains seen during late 2025. For Canadian employers, this shift signals that hiring momentum is slowing. Several factors appear to be contributing:

• economic uncertainty and slower growth expectations
• global trade pressures affecting manufacturing and industrial sectors
• employers reassessing workforce costs and automation investments
• a natural rebalancing after several years of unusually tight labour markets

This does not necessarily indicate a recession. Instead, it reflects a labour market that is adjusting after a period of rapid hiring.

Job Losses were Concentrated in Key Private-Sector Industries

A closer look at the February data shows that job losses were concentrated in private-sector industries, particularly in sectors such as manufacturing and retail trade.

Private-sector employment often reacts more quickly to economic uncertainty, interest rates, and shifts in consumer demand. This can create a labour market where:

• hiring slows in cyclical industries
• public sector employment remains relatively stable
• unemployment rises even while specialized talent shortages persist

For employers in engineering, infrastructure, technology, and life sciences, this distinction matters. Hiring conditions in specialized sectors may remain tight even when national employment numbers soften.

Canada’s Labour Market Continues to Send Mixed Signals

February’s report reinforces a pattern we have observed in several recent labour market updates.

Over the past year, Canada’s employment data has frequently delivered mixed signals. Some months show strong job gains, followed by sudden slowdowns or employment losses. At the same time, unemployment has edged upward even while many sectors continue to report persistent talent shortages.

This combination suggests the labour market is not moving in a single direction. Instead, Canada appears to be entering a phase where hiring conditions vary widely depending on sector, region, and skill specialization.

Recent Agilus labour market insights have highlighted similar dynamics in previous reports, including our analysis of the January Labour Market Report and the December Labour Market Outlook, where strong sector-specific hiring coexisted with broader economic caution. For workforce planning, national unemployment figures alone rarely tell the full story.

A Signal Many Headlines Miss: Full-Time Private Sector Employment Declined

One of the most important insights in the February report is the decline in full-time employment in the private sector. Full-time employment tends to be a stronger indicator of employer confidence than overall employment numbers. When organizations anticipate slower growth, they often:

• pause permanent hiring
• rely more heavily on contract or project-based work
• delay long-term workforce expansion

This does not necessarily mean companies are reducing activity. Instead, it suggests employers are becoming more cautious about long-term hiring commitments and are taking a strategic approach to hiring to fill the gaps in their workforces.

Employers Increased Hours Instead of Hiring

Another interesting signal appears deeper in the Labour Force Survey tables. While employment declined in February, total hours worked across the economy actually increased by 1.0%. This suggests that some employers may be maintaining production levels by increasing hours for existing staff rather than expanding headcount.

Organizations often respond this way during periods of economic uncertainty by:

• extending hours or using overtime
• redistributing workloads internally
• delaying hiring decisions until market conditions become clearer

For employers planning workforce strategy, this can signal a transition toward more cautious hiring without necessarily reducing business activity.

Youth Unemployment Is Rising

Another notable development in February was the increase in youth unemployment, which rose to approximately 14.1%.

Younger workers are often the first group affected when hiring slows because:

• entry-level hiring can be paused quickly
• early-career roles typically have less job security
• organizations may delay graduate recruitment programs

While this can temporarily increase the pool of available early-career talent, it can also create longer-term workforce challenges if fewer young professionals enter critical industries.

Wage Growth Remains Elevated

Despite the decline in employment, wage growth remains relatively strong.

According to Statistics Canada, average hourly wages increased 3.9% year-over-year to $37.56 per hour in February.

Several structural factors are supporting wage growth:

Persistent Talent Shortages: Even as overall employment declines, many sectors continue to face limited talent pools for specialized skills, particularly in engineering, infrastructure, technology, advanced manufacturing, and life sciences.

Employers competing for experienced professionals in these fields often need to offer higher compensation to attract or retain talent.

Cost-of-Living Pressures: While inflation has moderated, cost-of-living pressures continue to shape wage expectations.

Workers increasingly expect compensation that reflects rising housing, transportation, and living costs.

Retention Pressure: Wage increases are also being driven by retention strategies. After several years of tight labour markets, many organizations are prioritizing retention through salary adjustments and improved compensation packages.

At the same time, many Canadian organizations are investing in productivity improvements, automation, and AI-enabled workflows to help offset rising labour costs.

CEO Perspective: Strategic Hiring is Replacing Reactive Hiring

Craig Brown, CEO of Agilus Work Solutions, notes that while recent labour reports have pointed to slower hiring momentum, the broader recommendation for employers has remained consistent.

“Over the past few labour reports we’ve talked about the importance of strategic hiring, and that advice still holds. The difference now is that employers have a little more breathing room to make thoughtful workforce decisions, whether that’s permanent hiring, contract talent, or project-based expertise aligned to business priorities.“

What Canadian Employers Should Watch Next

While one month of data does not define a long-term trend, recent Labour Force Surveys suggest Canada’s labour market is gradually rebalancing. Several indicators will be important to monitor:

Labour Force Participation: Participation rates influence the true availability of workers. Changes in immigration, retirement, and workforce participation all affect hiring conditions.

Job Vacancies and Labour Market Pressure:  Statistics Canada has previously reported roughly three unemployed Canadians for every job vacancy, a notable shift from the severe labour shortages earlier in the decade. Ratios like this can move quickly as labour force participation changes, but February’s employment decline was concentrated among core-age men (25–54) (the group most consistently attached to the workforce) which economists often view as a clearer signal that hiring demand is softening.

Sector-Specific Hiring Trends: National numbers rarely capture the full picture. Many sectors, including engineering, infrastructure, nuclear energy, technology, and life sciences, continue to report difficulty filling highly specialized roles.

Hiring Strategy for the Months Ahead

For many organizations, the labour market between 2022 and 2024 was defined by intense competition for talent. Today’s environment is different. Employers may now experience:

• slightly larger candidate pools
• longer hiring timelines
• increased scrutiny around compensation and productivity

However, critical talent shortages have not disappeared. In sectors like engineering, technology, and life sciences, experienced professionals remain difficult to recruit.

Strategic hiring for employers means focusing on targeted hiring decisions aligned to productivity, project demand, and long-term workforce capability as outlined above.

About Agilus Work Solutions

Agilus Work Solutions is one of Canada’s largest recruitment firms, supporting employers across engineering, technology, life sciences, professional, industrial, and public sector roles.

With national reach and deep specialization, Agilus helps organizations access hard-to-find talent, navigate labour market shifts, and build workforce strategies that support long-term growth in Canada.

Employer FAQs

Is Canada’s labour market weakening in 2026?

Recent Labour Force Surveys show signs of a cooling labour market, including job losses and rising unemployment. However, many sectors continue to experience talent shortages, particularly in specialized roles and technical fields.

Why did Canada lose jobs in February 2026?

Employment declined by 83,900 in February as hiring slowed and some employers adjusted workforce levels amid broader economic uncertainty and cautious business planning.

Are Canadian employers still hiring?

Yes. Employers across Canada continue to hire, although timelines may be longer and hiring decisions more selective. Demand remains strong for specialized talent in areas such as engineering and technology, while many organizations are also recruiting for operational, administrative, and project-based roles.

Why are wages still rising if employment is declining?

Wage growth remains elevated due to ongoing talent shortages in key occupations, cost-of-living pressures, and competition among employers to retain experienced workers.

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