Canada's Population Wasn't Shrinking After All

For most of the year, the official numbers said the country was losing people. A September revision added back hundreds of thousands of temporary residents and reshaped what the labour supply actually looks like.

For three quarters running, the headline was the same: Canada's population was falling. Statistics Canada's preliminary estimates showed declines at the end of 2025 and again in early 2026, driven by a steep drop in temporary residents as Ottawa tightened study permits, work permits and other pathways. Economists built the decline into their forecasts. Some argued it explained the weak hiring data. A smaller population, the reasoning went, meant less slack in the job market than the unemployment rate suggested.

On Sept. 23, the story changed.

In its annual update, Statistics Canada put the population at 41,798,407 on July 1, 2026, the highest on record. The country added about 189,000 people over the previous year, growth of 0.5 percent. That is the slowest annual pace since 1915-16, but it is growth, not decline.

What changed

The revision came down to counting temporary residents, a group that has always been hard to track. The agency applied two new adjustments to its estimates going back to July 2021. One uses entry and exit records from the Canada Border Services Agency to estimate how many permit holders actually left the country before their permits expired, rather than assuming they did.

The effect was large. In June, the agency had estimated that the number of non-permanent residents fell by 117,879 in the first quarter. The revised figure is 64,502. Its estimate of the non-permanent resident population was raised by roughly 240,000 people.

The agency now estimates there were about 2.78 million non-permanent residents in Canada on July 1, or 6.7 percent of the population. That figure is still down about 155,000 from a year earlier, so the policy is working in the direction intended. It is just working more slowly than the earlier numbers implied.

The revision was not a complete surprise. In July, CIBC economist Benjamin Tal argued that the preliminary data probably overstated how many temporary residents had left, and warned that a correction could also ripple into the Labour Force Survey, which incorporates population changes through a 12-month moving average.

Why it matters for the labour market

For staffing firms, temporary residents are not an abstraction. Work permit holders make up roughly half of the non-permanent resident population, and many of them work in exactly the sectors that rely on agencies: warehousing, food processing, hospitality, agriculture, cleaning and personal care.

The revised numbers suggest a few things.

First, the pool of available workers is larger than the year's headlines implied. That helps explain why wage growth has cooled so sharply, particularly at the bottom of the pay scale. In the August jobs report, workers in the lowest quarter of the wage distribution saw hourly pay rise just 1.1 percent from a year earlier.