The last payroll survey indicates 45,600 job gains in January, while the LFS shows 25,000 lost jobs. Here is why.

The January 2026 release of the Survey of Employment, Payrolls and Hours (SEPH) provides a critical snapshot of the Canadian labor market's resilience and its shifting sectoral demands. For staffing professionals, the data reveals a market that is stabilizing after year-end fluctuations, characterized by a notable rebound in payroll employment and a steadying of job vacancies.

Payroll employment increased by 45,600 in January, a 0.2% rise that effectively reversed the modest contraction seen in December. This growth was not uniform across the economy but was instead driven by specific high-demand sectors. Educational services led the surge with 20,000 new payroll positions, a vital recovery following several months of decline in late 2025. Construction and finance also showed robust gains, continuing a growth trend in construction that has persisted since mid-2025. Conversely, retail trade experienced a contraction of 6,600 positions, highlighting the typical post-holiday cooling in consumer-facing sectors.

Understanding the relationship between SEPH data and the Labour Force Survey (LFS) is essential for an accurate market analysis. While both suggest a stabilizing labor market, they measure different dimensions of employment. The SEPH is a "business-side" survey, capturing actual payroll records, while the LFS is a "household-side" survey. In January, the SEPH showed a 0.2% increase in payroll jobs, while the LFS indicated a decline in the number of unemployed persons. This convergence resulted in a decrease in the unemployment-to-job vacancy ratio to 3.0, down from its 2025 peak of 3.3. This tightening ratio suggests that while the total volume of vacancies remains steady at approximately 492,400, the pool of available talent is narrowing, potentially increasing the time-to-fill for open roles.

Earnings and hours worked remained relatively flat on a month-over-month basis, with average weekly earnings sitting at $1,320. However, the 2.0% year-over-year increase in earnings reflects a moderate but persistent upward pressure on wages, likely driven by the specialized needs of the growing construction and finance sectors. For staffing agencies, this environment necessitates a dual focus: managing the talent scarcity in technical fields like non-residential building construction, while navigating the lower demand in retail and hospitality.