Canada's Job Market Reality: Why Official Statistics May Be Overstating Employment Growth
New analysis from Oxford Economics Ltd. reveals a concerning discrepancy in how Canada's employment situation is being measured, suggesting the country's job market may be in significantly worse shape than commonly reported.
Two Surveys, Two Different Realities
Statistics Canada employs two distinct methods to track employment changes across the nation. According to Oxford economists Tony Stillo and Michael Davenport, these approaches are producing dramatically different pictures of Canada's labor market health as of late 2025.
The more widely cited Labour Force Survey (LFS) suggested Canada added approximately 200,000 jobs during the six months leading to November 2025. However, the less frequently referenced Survey of Employment, Payrolls and Hours (SEPH) indicated the economy actually lost 5,000 positions during that same period.
Methodological Differences Create Significant Gaps
The divergence stems from fundamental differences in how these surveys collect data. The LFS relies on monthly surveys of approximately 65,000 households and is typically released within the first week following the measured month, making it popular for its timeliness among economists and media.
In contrast, the SEPH gathers information from monthly payroll administrative data and surveys of more than 15,000 businesses. While less timely, Oxford economists argue this approach provides a more accurate and well-grounded measurement of actual employment.
Year-Over-Year Discrepancies Reveal Troubling Pattern
The gap between these two measurement approaches becomes even more pronounced when examining longer timeframes. According to Oxford's analysis, the SEPH showed Canada added just 47,000 positions year-over-year, while the LFS indicated a much more robust 310,000 job increase during the same period.
For the January through November 2025 period, economists estimated an average discrepancy of approximately 760,000 jobs between the two surveys' total employment figures.
Why the LFS May Be Overestimating Employment
Stillo and Davenport identified several factors that could be causing the LFS to overstate employment growth:
- Population estimate methodology: The LFS incorporates population estimates assuming a stable count, which may not accurately reflect recent demographic shifts
- Post-pandemic demographic changes: The unprecedented surge and subsequent retreat of new labor market entrants following pandemic-era policies
- Sector-specific estimation flaws: Potential inaccuracies in how the LFS calculates employment creation across different industries
"We think this unprecedented demographic shift may be leading the LFS to overstate total employment in Canada," the economists stated in their report.
The Case for Payroll-Based Measurement
Despite its later release dates and narrower scope, Oxford economists maintain that the SEPH provides superior accuracy for several reasons:
- Direct payroll data offers concrete evidence of employment relationships
- Business surveys provide employer-side perspectives on hiring and staffing
- The methodology remains consistent despite demographic fluctuations
- It better reflects actual job creation during periods of significant population change
"Although it's less timely, the SEPH is based on a large survey of actual payrolls and provides a better estimate of job creation, especially during the ongoing demographic shift," Stillo and Davenport emphasized.
Implications for Economic Understanding
This discrepancy between Canada's two primary employment measurement tools has significant implications for how policymakers, businesses, and the public understand the country's economic health. The Oxford analysis suggests that relying primarily on the more timely LFS data may create an overly optimistic view of Canada's labor market recovery and economic resilience.
As economists continue to debate which measurement provides the most accurate picture, this revelation underscores the importance of considering multiple data sources when assessing complex economic indicators like employment growth.
