The January unemployment rate fell because the workforce is shrinking, not because it’s easier to find work

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Canada’s falling unemployment rate is being read as good news. It isn’t. The decline reflects fewer Canadians working because fewer people are looking for work and fewer people are here to work at all.

We in Canada rely on Statistics Canada for the labour and population data that tell us how the economy is actually performing, not how we might wish it to be performing.

But even trusted data can need some interpretation.

Statistics Canada’s recently released labour force survey for January is an example of why even reliable statistics can mislead without proper context. A key number in that survey is the unemployment rate; the percentage of the labour force that is looking for work. This measure counts only people who are actively seeking work and leaves out those who have stopped looking.

Canada’s job numbers look better than they really are.

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