Canada’s largest city is commonly known as the country’s economic capital, but that may change soon. Statistics Canada (Stat Can) data shows the Toronto CMA region added tens of thousands of jobs in January, but added even more unemployed people. Nearly 1 in 11 of the region’s workers are now actively unemployed and seeking work—a rate that’s rarely seen outside of the worst recessions.
Toronto Added 120k Jobs In The Past Year
First let’s start with the good news. Toronto is adding jobs at a fairly brisk rate. The region’s employed population climbed 0.8% (+31.5k) to 3.74 million people in January. Annual growth came in at 3.3% (+119.6k jobs), meaning nearly a quarter of gains were just last month. That would be very robust growth, if only it kept up with population estimates.
Toronto’s Unemployed Population Hit 357k People Last Month
Toronto CMA’s total unemployed population. Only those actively looking for work and considered available for the LFS reference week are included (i.e. full-time students, and those without work but not actively seeking employment are excluded).
Source: StatCan; Better Dwelling.
The only thing growing faster than Toronto’s jobs is the number of workers. The region’s unemployed population added 3.1% (+10.6k jobseekers) to hit a mindblowing 357.4k active job seekers in January. For those that missed it, the rate the region added unemployed people in the month was close to the rate it added jobs over the whole year.
The astronomical month continued a trend we’ve seen over the past year. The unemployed population surged 27.1% (+76.1k jobseekers) in the 12-months ending in January. Outside of the first year of the pandemic, the region hasn’t seen such aggressive growth of its jobless population in at least 10 years.
Nearly 1 In 11 Toronto Workers Are Now Unemployed
Persistently adding more jobseekers than jobs is a recipe for disaster, as most would assume. The unemployment rate climbed 0.2 points last month to hit 8.7% in January, adding about 1.5 points to last year. That effectively means that nearly 1 in 11 of the region’s workers are actively looking for work at the moment.
Canada’s labor market has sputtered over the past few months, but it isn’t nearly as bad as Toronto. The national unemployment rate was reported at 6.6% last month, about 2.1 points lower. Prior to 2020, Toronto hasn’t seen its unemployment rate climb to this height since 2012. Being home to the country’s financial sector, it was hit harder than most of Canada during the Global Financial Crisis.
There’s just a tiny detail to consider. Canada’s economy is facing threats from US tariffs, but it’s supposedly in a strong economy. That’s probably a hard sell to the people in Toronto, especially considering regions like Vancouver aren’t facing this kind of labor market pressure.
Toronto leads the country. Its 2012 recession directly preceded the demand plummet for commodities that triggered the 2015 glut everywhere else.
Question’s going to be how much can the country dilute its currency before its too unstable to actually become a risk to bank in.
Bingo. Early cycle lead—just like real estate frenzy went Toronto out, then the correction went Toronto out. Next is the unemployment wave.
The problem can rapidly escalate though. Montreal had that issue in the 90s, and that’s what let Toronto take its role as the top region. It might be Calgary’s turn since Ontario’s 2025 gov seems to resemble the kind of insanity Quebec was seeing in the 80s that led to a weak local economy.
Most people don’t realize how bad the outlook for Canadian banks has become as a result of fines like the one TD got hit. People think $3 trillion US is just their US operation, but total profits are pooled.
Bigly important is the US didn’t just hit the bank with a fine, but it also put caps on its ability to grow. Canada has the only GSIBs that aren’t allowed to bank in the world’s largest market, and that’s going to screw up the financial sector even before we see the impact from currency.
Wasn’t 1 in 11 also the ratio of RE agents to the general public in Toronto? This tracks.
So I guess our government’s vision for a new economy based on home ownership and foreign students dropping 20k+ isn’t going as planned? I wonder what would happen if we got back to basics ie resource extraction…?
How can you be sure about the unemployment rates?
The number of undocumented migrants in Canada is uncertain, with estimates varying widely:
Academic sources suggest a range of 20,000 to 500,000 undocumented persons in Canada.
More recent government estimates indicate the number could be higher, ranging from 300,000 to 600,000
The counter point to that is when Stats Can acknowledged Steve’s theory that they inflated the population data by millions of people.
How come unemployed are increasing while also jobs are increasing? The only way I can think of is if people are coming from somewhere else to look for a job on Toronto.
“…added even more unemployed people.”
They’re saying it’s the population growth or graduates from all of the prestigious “schools” that popped up in every strip mall.
Unemployment rate is right around 20% if you include everybody that gave up looking for a job, mostly people in their 20’s and early 30’s. Which the BOC doesn’t for obvious reasons.