Canadian Jobs Lost, But Unemployment Down

January's jobs report is a bit confusing at first glance, so here's the summary:

Unemployment was down to 6.5% (est. 6.7%) due to exits from the workforce  

Full time positions up by 45,000 

Part time positions down by 70,000, 

Netting 25,000 lost jobs 

First, why did unemployment fall?

Because nearly 120,000 people exited the labour force entirely. This was the largest non-pandemic labour force drop since early 2022. 

In other words, when Canadians stop looking for work or move away from Canada, they are no longer counted in the employment data. 

As David Rosenberg succinctly put it:

“Had the participation rate not sagged to 65.0% from 65.4%, the jobless rate would have risen back to 7.0%.”

One possibility is that many new Canadians who couldn't find work left Canada. The effect is that the unemployment rate dropped. 

Full-time employment rose by 45,000.

That’s the best reading since September 2025 and is the cohort most likely to:

Part time positions down by 70,000, netting 25,000 lost jobs.

The part time job losses were focused in Ontario manufacturing, with 50,000 jobs lost in this area alone. It's the highest loss of this kind since Trump took office in January 2025. 

The sheer volume of part time layoffs eclipsed the full time gains, resulting in the net loss we see.

Five-year bond yields, one of the best/ most sensitive leading indicators of economic performance, closed essentially unchanged. 

Implied odds of Bank of Canada cuts moved little. 

Interest rates are expected to sit roughly where they are through 2026, with any potential hikes pushed into 2027.

If unemployment drifts lower for mechanical reasons (demographics, lower participation), the economy can appear relatively stronger, even while growth is weak.

That creates a policy trap:

Manufacturing job losses help on the inflation margin, but they’re not happening fast enough to force the Bank’s hand. AI-related labour disruption is possible — but it's still more potential than present reality.

Economies can stagnate without breaking, and the BoC is comfortable waiting when nothing is forcing their hand. The result is rates stuck near neutral. 

Mortgage Rates:

With the gap between fixed and variable rates hovering around 0.25%, these savings do not justify the risk of a variable rate. 

Crises that truly drive rates lower tend to happen once a decade, on average. Waiting for one is not a strategy; it’s a hope.

On the surface, stock markets looked uneventful or even positive:

But underlying volatility was intense—especially in software, crypto, and precious metals.

Technology and SaaS stocks were hit hard.

For SaaS, the selloff reflects fear that AI models will compress growth and pricing power. 

For AI infrastructure giants, the worry is different: massive spending today with uncertain ROI tomorrow.

Some of this fear is likely overstated.

NVIDIA’s CEO Jensen Huang pushed back, noting that AI should enhance software, not erase it. Many SaaS platforms are deeply embedded in enterprise workflows. Replacing them isn’t just about cost — it’s about risk, retraining, and operational disruption.

Goldman Sachs, on the other hand, likens AI’s impact on SaaS to how the internet disrupted newspapers. 

Both can be true. Some companies will adapt and thrive. Others won’t.

For long-term investors, this matters less as a prediction and more as an opportunity set.

Volatility creates entry points, not verdicts.

Bitcoin experienced a sharp liquidity shock, briefly rebounding but still hovering near $70,000, well below recent highs.

Bitcoiners will point to:

All valid. However, in the short to medium term, Bitcoin still trades like a risk-on/risk-off instrument, not a stable currency.

I remain constructive long term — 5 to 10 years out, Bitcoin likely matures into a more widely held asset. The path there will not be smooth. The intense volatility scares off many on Main Street. 

Bitcoin needs to be priced less on speculation, leverage and swing trades - more on a fundamental long term asset holding. Over time, the data indicate this is happening in the right direction, albeit slowly.

Silver is in a similar camp. Prices are well ahead of production constraints and demand fundamentals. Long term, silver may do fine. Short term, expect volatility and reversals.

Gold remains the anchor. It’s the clearest hedge against dollar weakness and geopolitical stress. Even so, gold can dip during broader market selloffs. TSX-heavy portfolios already have meaningful exposure — overdoing it could reduce long term portfolio performance.

Last week, I added shares of ORCL, MSFT and CSU (TSX) to my explore portfolio.

Remember Critical Investing Rules During periods of volatility:

Volatility is uncomfortable, but it’s also a mechanism through which superior long-term returns are earned.

Learning to lean into down markets is a simple but difficult approach. But history shows you’re more likely to beat the market by embracing this approach. And sticking mainly to broad-based indexes (ex. VEQT or XEQT) also improves long term chances of success.

In environments like this, the winners aren’t the ones making bold forecasts. They’re the ones staying invested, managing risk, and letting time — not timing — do the heavy lifting.

**This content is provided for educational purposes only and is not personalized financial advice; always consult a qualified professional before acting on any information herein.