Job growth in Canada could almost flatline and it still wouldn't affect the national unemployment rate because of population declines, though the story differs on a province-by-province basis, says Toronto-Dominion Bank.
National breakeven employment growth nears zero
“Canada’s job market is entering a new phase,” Marc Ercolao, an economist at TD, said in a report on July 8, two days before the June Labour Force Survey is released by Statistics Canada. TD estimated that to hold the national unemployment rate steady — “breakeven employment growth” — the number of new jobs needed on a monthly basis is close to zero since federal immigration cuts have reduced Canada’s population over the past few quarters for the first time on record.
Provincial differences masked by national average
However, Ercolao said a national near-zero growth rate “masks” major differences from province to province. “In some provinces, labour forces are already shrinking,” he said. “In others, migration and younger demographics continue to expand the pool of available workers.”
For example, the amount of hiring needed to hold unemployment rates steady in Ontario, British Columbia and Quebec has “sharply” fallen, with Ercolao estimating that those provinces could lose 11,000, 13,000 and 36,000 positions, respectively, without triggering a higher jobless rate. “This marks a sharp reversal from their historical pattern of steady job growth,” he said. He noted that the decline in population growth in the three provinces is the main reason for the change, and he expects their workforces to shrink this year because of the loss of younger working-age temporary immigrants.
Alberta faces higher breakeven threshold
Meanwhile, Alberta will need to add 56,000 positions this year to keep a lid on the unemployment rate, TD said, because the province continues to record the highest rate of people moving there from other parts of Canada, while a younger population implies that the workforce will continue to grow. “Alberta’s breakeven threshold is meaningfully higher,” Ercolao said. “That limits how far its unemployment rate can fall, even with solid hiring.”
Prairies and Atlantic Canada buck the trend
Several other provinces, including Saskatchewan and Manitoba, are forecasted to add jobs above their breakeven points recorded prior to the pandemic. The Prairie workforce is expected to expand nearly two per cent in 2026 and Atlantic Canada’s could grow almost one per cent compared against “national stagnation,” TD said. Newfoundland and Labrador is expected to mirror its historical pace of job growth, recording a flat breakeven, TD said.
“As labour force growth stalls, national employment reports are becoming harder to interpret,” Ercolao said, adding that the Bank of Canada has already cautioned that labour force data needs to be interpreted with care.
