For the first time in nearly five years, Canada's population has recorded a quarterly decline, a significant shift attributed primarily to a sharp reduction in the number of foreign students and temporary workers entering the country.
A Historic Shift in Demographic Trends
According to new estimates released by Statistics Canada, the nation's population stood at 41.57 million on October 1, 2025. This represents a decrease of approximately 76,068 people, or 0.2 per cent, from the July 1 estimate of 41.65 million. The last time the federal agency reported a quarterly population decline was during the final months of 2020, a period heavily impacted by COVID-19 border restrictions.
Stacey Hallman, a spokesperson for Statistics Canada, emphasized the rarity of this event. "Other than that [2020], Canada has never reported a quarter-to-quarter reduction in population levels," Hallman stated. She noted that international migration has been the dominant driver of growth for a long period. "Within the last three or four years, it was accounting for 95 per cent to 99 per cent of our population growth. That means it's highly dependent on government policies, and within the last year, we've seen changes in those policies and we're starting to see the impact of that on the population in the data."
The Driving Force: A Sharp Drop in Non-Permanent Residents
The data reveals that the primary factor behind the population drop is a substantial exodus of non-permanent residents (NPRs). In the third quarter of 2025, the number of NPRs fell by 176,479, marking the largest single-quarter decline since comparable records began in 1971. This drop far exceeded the decreases seen in the first two quarters of the year.
This trend represents a dramatic reversal from the record population growth experienced between 2022 and 2023. During that period, a surge in temporary residents, including foreign workers and international students, helped address widespread labour shortages. However, as economic conditions shifted and the unemployment rate rose, the federal government under Prime Minister Justin Trudeau introduced policy changes in 2024, including caps on temporary residents and revised immigration targets.
As of October 1, there were an estimated 2.85 million non-permanent residents in Canada, constituting 6.8 per cent of the total population. This is down from roughly three million, or 7.3 per cent, on July 1. The federal government has set a goal to reduce the NPR share of the population to five per cent by the end of 2027.
Economic Implications and Future Outlook
Economists are closely watching this demographic adjustment, which one analyst called "one of the biggest economic stories in Canada." Robert Kavcic, an economist at the Bank of Montreal, outlined the potential consequences in a research note.
"In order to hit the non-permanent resident target share, we'll need to see population growth run barely above zero through 2028, before settling back into a longer-term run rate of just under one per cent," Kavcic wrote. He identified several potential impacts, including:
- A significant weakening in the rental housing market.
- Less pressure on services inflation.
- Reduced slack in the youth job market.
- A likely pickup in productivity and growth in real GDP per capita.
The population growth rate hovered near zero per cent in the first two quarters of 2025, setting the stage for the third-quarter decline. This new data underscores how swiftly changes in immigration and temporary resident policy can alter Canada's demographic landscape, with wide-ranging implications for the economy, housing, and public services in the years ahead.
