Canada’s job market experienced a setback in August, shedding 42,000 positions, according to Statistics Canada. This decline came as a surprise to some analysts who had anticipated a fourth consecutive month of job gains since May. The unemployment rate remained unchanged at 6.4 percent for the month.
The latest Labour Force Survey revealed a decrease of 20,000 jobs in the public sector for the third consecutive month, while employment in the private sector remained relatively stable. Notably, the manufacturing industry saw a positive trend by adding 22,000 jobs, whereas sectors such as public administration, natural resources, and utilities reported declines.
CIBC’s chief economist, Andrew Grantham, highlighted that manufacturing was the only sector to experience a notable employment increase in August. This reflects a broader economic slowdown in Q3, following a robust second quarter, with uncertainties surrounding U.S. trade.
Quebec saw the most significant job losses, with 19,000 positions disappearing, followed by Ontario with an 18,000-job decline. Despite the softening job market, Bank of Montreal’s chief economist, Douglas Porter, noted that the recent report was not unexpected.
Statistics Canada reported that the average hourly wage growth in August was the slowest in nearly nine years, dropping to two percent annually, down from 2.8 percent in July and 3.3 percent in June. Economists had predicted a gain of 15,000 jobs in August, with the unemployment rate remaining steady at 6.4 percent.
This data release marks a departure from the trend of monthly job increases. In July, the Canadian economy added 75,000 jobs, contributing to a total of 181,000 jobs from April to July.
The latest jobs report comes amid heightened trade tensions between Canada and the U.S., with significant tariffs imposed on both sides. To address the economic impact on workers and businesses, the federal government launched a $7.5-billion relief program, in addition to previous tariff support measures totaling nearly $25 billion.
Industries reliant on U.S. exports continue to face economic uncertainty, with higher layoff rates compared to other sectors. Canadian exports to non-U.S. markets have been growing, particularly in Europe. Bank of Canada Governor Tiff Macklem commented on the recent U.S. tariffs, noting their limited scope.
While Canada saw a decline in job numbers, the U.S. labor market showed resilience in August, adding 162,000 jobs, with a steady unemployment rate of 4.1 percent. President Trump praised the U.S. job growth and advocated for a rate cut by the Federal Reserve. In contrast, Canadian economists expect the Bank of Canada to maintain its current policy rate at 2.25 percent for the remainder of the year.