National unemployment rate in Canada - Data and Analysis (1980-2032)

Unemployment is expected to decline modestly in 2026, with the rate easing to 6.6% as several supportive forces take hold across the labour market. Slower immigration will curb population growth, reducing the excess supply of workers and helping maintain hiring conditions. An aging population has added to this effect, pushing the labour force participation rate (LFPR) down to 64.8% in September 2026, its lowest level since 1997, outside of the pandemic. A smaller pool of active job seekers has helped lower unemployment, even as hiring has softened. Risks remain, particularly around future trade relations with the United States. The United States declined to renew CUSMA at its July 2026 joint review. The agreement remains in force, but it is now subject to annual reviews, which could weigh on business investment and hiring.Over the five years to 2026, the unemployment rate has been highly volatile, though it has declined at a compound annual rate of 2.5% overall. The rate fell sharply from 7.5% in 2021 to 5.3% in 2022 as the economy recovered from the COVID-19 pandemic, which pushed annual unemployment to 9.7% in 2020. Large-scale vaccination and the lifting of public health restrictions supported a strong rebound in hiring, led by healthcare, education, warehousing and transportation. Unemployment then rose steadily from 2023 to 2025, reaching 6.9%. The Bank of Canada's rate hikes through 2022 and 2023 weighed on consumer spending and business investment, while inflation and rising consumer insolvencies strained household finances. Private-sector job creation slowed, with the public sector absorbing some of the slack. US tariffs imposed in 2025 added further pressure on trade-exposed industries. The Bank of Canada responded by cutting its policy rate by 275 basis points from mid-2024 to 2.25%, helping to stabilize the labour market.Additional macro trends shaping labour performance over this five-year span include persistent interprovincial labour mobility barriers due to varying certifications and regulation and the shifting weight of service sectors within the economy. The period exposed the workforce's vulnerability to external shocks and highlighted public policy's central role. Despite a moderating economic backdrop, stability in healthcare and select service sectors helped to limit further spikes in unemployment and preserved underlying resilience in the labour market, culminating in unemployment falling at a 2.5% compound annual rate over these years.