Although the unemployment rate in Ottawa-Gatineau fell to 4.5 per cent in December, the capital region lost 1,500 jobs.
Many of the job losses were posted in the retail sector.
Still, the unemployment rate declined because more people left the workforce, according to Statistics Canada.
About 2,900 people retired, left the city or stopped looking for work.
The numbers across the country were worse than expected, showing Canada's economy lost 34,000 jobs in December alone.
Along with that, the nation's unemployment rate jumped to 6.6 per cent, up from 6.3 per cent in November, according to the numbers released by Statistics Canada on Friday morning.
"This was larger than markets had been expecting," Craig Alexander, deputy chief economist of TD Bank Financial Group, told CTV's Canada AM.
"They had been anticipating a 20,000 job loss and the unemployment rate came up to 6.6 per cent, again worse than expected because markets were looking for 6.5 per cent," he said.
The jobless numbers pulled the loonie down by almost a full per cent against the U.S. dollar on Friday morning. It fell by 0.96 cent to 83.89 cents U.S.
The Toronto stock market also fell sharply, reacting to employment statistics in Canada and the U.S., which reported that it lost more than half-a-million jobs last month. Toronto's S&P/TSX composite index dropped 131.2 points to 9,090.4.
Analysts said the higher jobless numbers will almost certainly mean that the Bank of Canada will cut interest rates on Jan. 20.
Friday's unemployment numbers mark the second straight month that job losses have been recorded in the Canadian economy. In November, 71,000 jobs were lost.
