What Canada’s January 2026 Jobs Report Means for Immigration Policy
On this page you will find
- Why a lower unemployment rate does not tell the whole story
- How regional job trends affect immigration allocations
- What sector changes mean for skilled worker selection
- Why labour force participation still supports immigration
- The broader policy signals for 2026
Canada’s latest Labour Force Survey shows a labour market that is cooling in some areas while remaining tight in others. For immigration policy, that mix matters more than the national headline.
The unemployment rate fell to 6.5% in January. However, this was driven largely by fewer people looking for work rather than a surge in hiring. Employment edged down overall, and the participation rate also declined.
These trends support Ottawa’s recent approach of keeping immigration levels high but more targeted, with closer alignment to regional and sector needs.
Lower unemployment, but softer participation
A falling unemployment rate often suggests a stronger labour market. In January, though, fewer people were actively searching for work. That pushed the rate down even as total employment dipped slightly.
For immigration policy, this supports the idea that Canada’s labour market is not overheating. It gives the federal government room to focus on stabilising temporary resident growth while still using permanent immigration to address long-term demographic and skill needs.
Ontario slowdown versus Prairie momentum
Employment fell sharply in Ontario, while Alberta, Saskatchewan and Newfoundland and Labrador posted gains. These regional differences strengthen the case for targeted immigration.
Provinces with job growth can argue for more nominees under their provincial nominee programs. At the same time, weaker conditions in Ontario may reinforce recent efforts to better manage international student and temporary worker numbers in that province.
Manufacturing declines and sector targeting
Manufacturing employment dropped noticeably in January, with losses concentrated in Ontario. This could influence how governments think about occupation targeting.
Some manufacturing and trade-related roles have featured in Express Entry category draws and provincial occupation lists. If weakness continues, policymakers may shift more focus toward sectors showing sustained demand rather than broad industrial hiring.
Growth in services, agriculture and information sectors
Not all industries slowed. Employment increased in information, culture and recreation, business, building and other support services, agriculture and utilities.
These sectors often rely on immigrant workers, including through temporary and seasonal programs. Continued growth here suggests immigration will remain important in supporting service delivery, food production and parts of the digital economy.
Wage growth remains solid
Average hourly wages rose by more than 3% compared with a year earlier. That level of wage growth suggests employers are still competing for workers, even as overall hiring cools.
For immigration policy, this points to ongoing skill shortages in certain areas, rather than a broad surplus of labour. It supports a selective approach that prioritises high-demand occupations.
Participation decline and long-term labour supply
The labour force participation rate fell in January, especially in Ontario. Over time, an aging population and more people staying in school reduce the share of Canadians who are working or looking for work.
Immigration remains one of the main tools available to offset these structural pressures. Even in a slower month for hiring, demographic trends continue to underpin the case for sustained newcomer inflows.
Job churn in trade-exposed industries
Survey data also show more workers in industries dependent on United States demand are planning to leave their jobs. Higher job turnover can create new hiring needs, even if overall employment growth is modest.
Employers in these sectors may increasingly look to immigration programs to replace experienced workers and maintain operations.
What this means for immigration policy
Taken together, the January data support a balanced immigration strategy. Canada does not appear to need a dramatic expansion in overall inflows, but it does need carefully targeted selection.
Regional growth in the Prairies, ongoing demand in services and agriculture, and steady wage pressures all point to continued reliance on immigration. At the same time, softer conditions in some provinces and industries justify a more controlled approach to temporary migration.
FAQ
Does a lower unemployment rate mean Canada needs less immigration?
Not necessarily. In January, the unemployment rate fell mainly because fewer people were looking for work, not because hiring surged. Long-term issues such as an aging population and regional labour shortages still support the need for ongoing, targeted immigration to sustain the workforce.
How do regional job trends affect immigration programs?
Provinces with stronger job growth can push for larger allocations under provincial nominee programs. Regions with weaker labour markets may see tighter controls on certain temporary streams, while still using immigration to fill specific shortages that cannot be met locally.
Which sectors are most likely to rely on immigration?
Recent gains in services, agriculture and information-related industries suggest continued demand for immigrant workers. These sectors often depend on both permanent and temporary programs to meet labour needs, especially in roles that face persistent recruitment challenges within Canada.
Could manufacturing job losses change Express Entry priorities?
If manufacturing weakness continues, governments may adjust which occupations they prioritise through Express Entry category draws or provincial lists. The focus may shift toward sectors with clearer, sustained labour demand rather than broad-based industrial hiring.
Why does labour force participation matter for immigration?
When fewer people work or look for work, the overall labour supply shrinks. Aging, schooling and caregiving trends contribute to this. Immigration helps offset these structural pressures by bringing in working-age newcomers who can support economic growth and public services.
