Canada’s job market saw a setback in August as Statistics Canada reported a loss of 42,000 jobs, defying expectations of continued growth for the fourth consecutive month. The unemployment rate remained unchanged at 6.4 per cent during the same period.
According to the latest Labour Force Survey, the public sector workforce declined by 20,000 jobs for the third month in a row, while there was minimal change in the private sector. Notably, the manufacturing sector showed positive growth by adding 22,000 jobs, while sectors such as public administration, natural resources, and utilities experienced declines.
CIBC chief economist Andrew Grantham noted that manufacturing was the only sector to see a significant increase in employment in August, aligning with other indicators suggesting a slowdown in the economy for Q3 following a robust second quarter.
Quebec and Ontario were the hardest-hit provinces, losing 19,000 and 18,000 jobs, respectively. Despite the soft job report, Bank of Montreal chief economist Douglas Porter suggested that the results were not surprising given the previous strong job figures.
Average hourly wage growth in August hit a nearly nine-year low, with a slowdown to two per cent on an annualized basis from 2.8 per cent in July and 3.3 per cent in June. Economists had predicted a gain of 15,000 jobs and a steady unemployment rate of 6.4 per cent for August.
The recent data marks a break in the trend of monthly job gains, following an addition of 75,000 jobs in July and a total of 181,000 jobs from April to July. The job market challenges come amidst ongoing trade tensions between Canada and the United States, with recent tariff impositions affecting various industries.
To mitigate the impact, the Canadian government introduced a $7.5-billion expanded economic relief program for affected workers and businesses. These measures complement the existing $25 billion in tariff support implemented over the past year and a half.
Statistics Canada highlighted the uncertainty faced by industries reliant on U.S. export demand, noting higher layoff rates in those sectors over the past year. The agency also pointed out a gradual decrease in the share of Canadian exports destined for the U.S., emphasizing the importance of diversifying trade relationships.
While Canada faced job losses in August, the U.S. labor market showed resilience with employers adding 162,000 jobs and revising previous payroll figures upward. The U.S. unemployment rate remained steady at 4.1 per cent, prompting President Trump to advocate for a rate cut by the Federal Reserve.
Looking ahead, many economists anticipate the Bank of Canada to maintain its policy rate at 2.25 per cent for the remainder of the year amid economic uncertainties and trade challenges.