Canada’s job market experienced a setback in August, shedding 42,000 jobs, according to Statistics Canada. This decline was unexpected, as economists 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 public sector workers, marking the third consecutive month of decline, while there was minimal change in private sector employment. Notably, the manufacturing sector showed strength by adding 22,000 jobs in August, although sectors such as public administration, natural resources, and utilities saw declines.
CIBC chief economist Andrew Grantham noted that manufacturing was the sole sector with a significant increase in employment for the month. This trend aligns with other indicators like exports and monthly GDP, suggesting a slowdown in the economy for the third quarter following a robust second quarter, amid heightened uncertainty surrounding U.S. trade relations.
Quebec and Ontario were the hardest-hit provinces, losing 19,000 and 18,000 jobs respectively. Bank of Montreal chief economist Douglas Porter mentioned that the recent job figures were softer but not surprising given the strong job results in previous months.
Statistics Canada reported that average hourly wage growth in August was the slowest in nearly nine years, with a slowdown to two percent on an annualized basis, 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.
The recent data marked a departure from the trend of monthly job gains, with 75,000 jobs added in July and a total of 181,000 jobs added from April to July. The job market report comes at a time of escalating trade tensions between Canada and the U.S., with tit-for-tat tariffs being imposed on various products.
To address the economic challenges, the Canadian government introduced a $7.5 billion expanded relief program for affected workers and businesses, in addition to previous tariff support measures. Industries reliant on U.S. demand for exports are facing uncertainties, with layoffs in these sectors outpacing others over the past year.
While Canada’s job market cooled in August, the U.S. reported job gains, adding 162,000 jobs last month with a steady unemployment rate of 4.1 percent. President Donald Trump lauded the job numbers, advocating for a Federal Reserve interest rate cut. In Canada, economists anticipate the central bank to maintain its policy rate at 2.25 percent for the rest of the year.