Canada’s job market remained stagnant in August as it shed 42,000 positions, according to Statistics Canada. This unexpected decline contrasted with economists’ forecasts, which had anticipated continued growth for the fourth consecutive month since May. The unemployment rate remained steady at 6.4% last month.
The latest Labour Force Survey revealed a decrease of 20,000 public sector jobs, marking the third consecutive monthly decline. Private sector employment remained relatively unchanged. Notably, the manufacturing sector saw a positive trend, adding 22,000 jobs in August, while other sectors such as public administration, natural resources, and utilities experienced declines.
CIBC’s chief economist, Andrew Grantham, highlighted the significance of the manufacturing sector’s employment increase in August. The data aligns with indicators like exports and monthly GDP, suggesting a slowdown in the economy during the third quarter, amid heightened uncertainty surrounding U.S. trade.
Quebec was the most impacted region, losing 19,000 jobs, followed by Ontario with an 18,000-job loss. Bank of Montreal’s chief economist, Douglas Porter, noted that the recent job report, although soft, was not surprising given Canada’s previous strong job performance.
Average hourly wage growth in August saw its slowest increase in almost nine years, with a modest rise of two percent on an annualized basis, down from 2.8% in July and 3.3% in June.
The job market outlook was in line with a Reuters poll of economists, forecasting an addition of 15,000 jobs in August, while the unemployment rate was expected to remain at 6.4%. The recent data breaks a streak of monthly gains, following the addition of 75,000 jobs in July and a total of 181,000 jobs from April to July.
The current job market challenges coincide with escalating trade tensions between Canada and the U.S., with recent tariffs impacting various industries. In response, the Canadian government unveiled a $7.5 billion economic relief program to support affected workers and businesses, in addition to the $25 billion in tariff support implemented over the past year and a half.
Statistics Canada highlighted the continued uncertainty in industries reliant on U.S. export demand, noting higher layoff rates compared to other sectors. Scotiabank economist Mitch Villeneuve emphasized the shift towards non-U.S. markets in Canadian exports, particularly to Europe.
While Canada’s job market saw a decline, the U.S. Labor Department reported an addition of 162,000 jobs in August, with the unemployment rate holding at 4.1%. President Trump praised the job numbers, advocating for a Federal Reserve interest rate cut to further stimulate the economy.
Despite the contrasting job market performances, many economists project the Bank of Canada to maintain its current policy rate of 2.25% throughout the remainder of the year.