Canada’s economy is booming… or not. Depends on whether you’re in economics or finance—or in academia or looking for a job. Statistics Canada (Stat Can) seasonally adjusted data shows the country added tens of thousands of jobs in January, pushing the unemployment rate lower. Unadjusted data tells a very different story, with the country adding nearly 200k jobseekers, pushing the unemployment rate to the second highest monthly print since the 2021 recession. We promise, you’ll understand jobs data and how to read it better than your local politician in just a few minutes.
Canada Adds 76k Jobs… Sort of. Depends How It’s Counted
Canadian headline employment data is showing strong improvements. The country added 76k seasonally adjusted jobs in January, helping to push the unemployment rate down to 6.6% (-0.1 points). The rate has shown a 0.3 point improvement since peaking in November 2024, but remains 1.6 points higher than March 2023. It’s been a remarkable turnaround and policymakers seem to be eager to test this data at the polls.
Find the numbers hard to believe? That’s become a fairly common issue, which policymakers refer to as a “vibecession.” The economy isn’t bad, but people feel like the data is wrong because they’re just in a negative mindset. Unfortunately, it’s a little more complicated than that. Let’s talk about seasonal adjustments.
Seasonally Adjusted Affective Disorder (SAAD)
Seasonal adjustments are a statistical method to remove predictable patterns from time series data. Spending is very seasonal, especially when it comes to large, expensive items. People buy homes and cars in the Spring, don’t buy winter coats in July, or air conditioners in January. Adjusting for these predictable patterns helps to remove noise and make it easier to spot trends over the long term.
Predictability is the key word there, especially as the world becomes more or less predictable in different areas. The economy isn’t as dependent on agriculture as it was 100 years ago when the idea was first introduced, and modern advancements in tech mean the road is blown so you can get to the factory. The future is now.
At the same time, the volatility of trade is less predictable than it once was. Some rowdy guys in wigs would throw the tea in the harbour once every 300 years back then. Now an election in a single country can suddenly re-write how trade is conducted. Economists in government and academia still consider seasonal adjustments as the de-facto standard, but it’s less relevant in finance.
“You can’t seasonally adjust a terrorist attack,” said JP Morgan economist Marc M Goloven back in 2002.
Goloven was dismissing the “false positives” seen on Wall St a year after the 9/11 terror attacks. Global consumption did not have a predictable pattern, and consequently the adjustments made data look much better than they were in reality. There goes predictability.
“Seasonally adjust me, I’m George Clooney,” explained Wells Fargo economist Mark Vitner, who could only barely pass as the actor’s twin. He was dismissing eroding job data during the 2019 economic slowdown that became overshadowed by 2020.
The skepticism isn’t just a one-off issue either. The EU warned internally how little research on seasonal adjustments exists, despite the dogma surrounding it. The economy there is probably fine after dismissing the issue… does the EU still exist?
We know. What if our data doesn’t like techno and soccer? Well, the US Federal Reserve recently warned the events of 2020 would distort data in the coming years. An issue the central bank is familiar with, after realizing post-Great Recession data indicated a recovery occurred much faster than believed, resulting in delivering the wrong policy.
None of this is to imply that seasonal adjustments are an intentional distortion or conspiracy. It’s just an issue of understanding it may not provide the data a person is looking for, and it’s not just because they’re vibin’ wrong. However, unadjusted data is messy looking and seasonally adjusted data makes it easier to spot a trend—even if it’s the wrong trend. So there’s that.
On that note, let’s look at the unadjusted employment model. The unadjusted data makes more sense to the average person who needs a job to pay their bills. It probably doesn’t go over well when a person gets fired and applies for a mortgage with their income stated as seasonally adjusted. Maybe at some Canadian banks…
Canada Actually Lost 174k Jobs & Gained 198k Unemployed People
The unadjusted employment data isn’t the worst Canada has seen, but it’s certainly less than flattering. Seasonally adjusted the country added jobs, but unadjusted data shows 173.5k fewer jobs in January. Last month is usually a big month for joblosses, but this was bigger than usual.
More important is the unemployment rate, which only includes people ready, willing, and able to work. That means no full-time students, or people who plan to look for a job next Tuesday but never get around to it. Canada’s unadjusted unemployment rate climbed 0.9 points to 7.1% in January. With the exception of August 2024, this would be the highest unadjusted unemployment rate since 2021.
Canadian Unadjusted Unemployment Rate Hits 2nd Highest Month Since 2021 Recession
The seasonally adjusted and unadjusted unemployment rate across Canada.
Source: Stat Can; Better Dwelling.
Not exactly something to dismiss simply because it’s smoothed out in adjustments. There’s also the issue that the adjusted rate is 7% lower than unadjusted in January 2025, but it was only 6.6% in 2024. In 2017, the rate was only 5.5% lower for the month. The seasons are creating much more noise these days compared to 8 years ago. Maybe it’s just climate change.
Ultimately the two data points are important to different people for different reasons. A bureaucrat or journalist looking for some good news, may prefer the seasonally adjusted unemployed population fell 14.9k to 1.49 million people in January. Those looking for a job are likely more concerned that the unadjusted data shows the unemployed population rose 198.1k to 1.57 million unemployed people searching for work. In academia, the people removed by seasonal adjustments don’t exist—but in reality, more people are competing for roles.
There’s also the issue of those not looking for a job. As discussed last week, Canada massively overinflated the share of immigrants it was able to retain. Not just over the past few years, but this was a multi-decade issue. That portion of the population is modeled into the non-participation rate, downplaying the number of people able to exist without employment. On the upside, the millions of people that only exist in estimates means the housing shortage is really bad in cities, but not as bad as presented. In fact, the people fleeing cities like Toronto likely caused a bigger shortage than they were told Toronto had. Unfortunately prices are based on expectations, since reality can just be adjusted in an academic model.
Good piece. I always find it funny to see CREA seasonally adjust things like home prices.
I guess a home costs less in the winter, so the modeling needs to boost it. Then it costs too much in the summer, so modeling needs to… do nothing.
Do seasonally adjusted sales even matter? It feels like CREA and TRREB just need to figure out new ways to spend their member fees, so they do a circle jerk that doesn’t really tell us anything.
How about telling people how “quality” impacts price? The quality goes down for the same price, the data shows the price went up! You’re paying more for junkier housing. Booyah!
Don’t even have to get into the adjustments, as Mr Wong pointed out a couple days ago. It’s a tiny survey where they project, and the gap between payrolls and the LFS shows a widening gap.
This either means:
a) More jobs in the informal economy like Uber, Door Dash, etc.
b) More jobs are in the “informal economy,” laundering or the border issue
c) immigration fraud, where people claim jobs on paper but need them when the gov checks
Do you really think there’s as much illegal jobs and fraud? I know there’s good arguments but I can never determine if it’s a real issue or there’s some really bad examples used that make it seems like it’s worse.
I swear the comments are as informative as the articles. Have you considered subscription to comments or adding the ability to like them so we can see most valuable of the week or something? I know that is probably harder than it sounds but I come back to articles on the Sunday round up or whatever its called and just to check to see what people are saying. Haha.
Listen, I been living here for 50 years in Toronto. Sometimes good, sometimes bad but home prices always go up. I would be a fool not to buy it and because it can pay my whole house.
Owned a restaurant for decades and still didn’t make money like an investment in my house.
K Q’s go stimulate someone else’s Prost it
Been unemployed for 1.5 years so far. When I graduated in the 2008 recession it took me 6 months. Covid wrecked my business and work but I got tiny gigs to get by and got 2 job offers in 1 year. Nothing is as worse than how it is now. Same for everyone else I know unemployed. We have terrible government, media, and institutions in this country. Horrible. And 3 employers have told me they’d hire me if I was indigenous but otherwise their hands are tied. In less than a year more of this suffering, I plan move to another country and retire early, if things don’t change. What choice do I have. Spent my young years unemployed forever? I’m also learning Options trading… might work… to buy food and avoid homelessness in Canada maybe everyone needs to trade. Min wage jobs are also not available to me or someone of my background. Who is this country for anymore. What is the point of Canada anymore. No clue.
I look all around me and see exactly what are you talking about. As someone who invested their whole life into this country only to see it become a total dumpster fire my advice to anyone young is to get out and build your life elsewhere. I wish you all the best.
Raj is right. I read the article, then get into the comments. Some I have saved. I go back in a few days on good articles and check the comments.
The big issue with statistics today, as pointed out here, is they are not transparent.
Another example is canadas cpi rate which is always artificially lower than the us or uk because instead of counting the cost of financing in buying something, they havw a created ‘interest’ segment.
This means in addition to the fact that cpi was never comparable between countries, canadas cpi falls because the boc cuts rates, even if the privlce of everything else goes up?
With respect to unemployment, which is another key metruc that is used to set monetary policy, we hace a similar issue. If we are uaing ei definition and stats, we can be sure that number is wrong. Secondly, adjusting for xmas hiring and firing is fine, but the devil is in the details. Hiw do yougo from 176k to 76k by adjusting for hiring during xmas?
Finally, not nearly enough has been made of freelands riduculous comments about a vibecession. Its 100% obvious that our usd gdp per capita has lagved the usa by 63% since 2014. This is not a vibe, this is how much money we in total produce per person.
Add to thia the fact that canada has increased its m3 by almost 3 times since 2015, and the vibe is clear – the banks, govt and media ade conning us. Yes a crappy house in toronto that cost 400k in 2008 is niw 2M, but if that 2M is reallu only 1/4 of what it was in 2008, and dropped by 35% due to ths dismal state of cad, then uts baeely moved at all.
I remember the first day of macro theory in university. The prof said, what was the avedage inflation rate from 2000bce to 1750? Mist of the class said 3, 4, 5%? He said, no ir was zero. Inflation, prices are 100% dictated by monetary and vank regulation policy by govt.
Also for that guy who sId housing prices always go up. I lived in toronto in 1988. We sold our house that year and moved. It wasnr until 2005 that that house cost thaf much again. Thats almost 20y. Hoysing averages at slightly more than gics over tue long term, so a big drop us coming.