Canada’s employment landscape faced a setback in August with a loss of 42,000 jobs, as per Statistics Canada’s report released on Friday. This decline caught some analysts off guard as they had anticipated a fourth consecutive month of job gains since May. Despite this, the unemployment rate remained stable at 6.4 percent for the month.
The latest Labour Force Survey revealed a decrease of 20,000 public sector jobs, marking a third consecutive monthly decline, while the private sector employment remained largely unchanged. Notably, the manufacturing sector stood out by adding 22,000 jobs, contrasting with declines in public administration, natural resources, and utilities sectors.
CIBC chief economist Andrew Grantham noted that manufacturing was the sole sector to witness a significant increase in employment during August, aligning with other economic indicators suggesting a slowdown in the economy for Q3 due to uncertainties surrounding U.S. trade.
Regionally, Quebec and Ontario bore the brunt of job losses, shedding 19,000 and 18,000 jobs, respectively. Bank of Montreal’s chief economist Douglas Porter remarked that the recent job figures, while soft, were not entirely unexpected following a series of robust job reports in previous months.
Average hourly wage growth in August hit a nearly nine-year low, with a slowdown to two percent annually from 2.8 percent in July and 3.3 percent in June, according to Statistics Canada data. Analysts had predicted a gain of 15,000 jobs in August, with the unemployment rate remaining at 6.4 percent.
The recent job figures come amid escalating trade tensions between Canada and the U.S., with significant tariffs imposed on both sides. To mitigate the impact on affected workers and businesses, the Canadian government introduced a $7.5 billion expanded economic relief program, supplementing the existing $25 billion in tariff support over the past year and a half.
Statistics Canada highlighted the challenges faced by industries reliant on U.S. export demand, citing higher layoff rates compared to other sectors over the past year. Scotiabank economist Mitch Villeneuve noted a gradual decrease in the share of Canadian exports destined for the U.S., emphasizing faster export growth in non-U.S. markets, particularly Europe.
Meanwhile, the U.S. Labor Department reported positive job gains in the U.S. labor market in August, adding 162,000 jobs and revising June and July payroll figures upward by 55,000 jobs. President Trump lauded the job numbers on social media and advocated for a Federal Reserve interest rate cut to further boost the economy.
In Canada, many economists anticipate the Bank of Canada to maintain its policy rate at 2.25 percent for the remainder of the year despite the challenging economic environment.