Canada’s job market saw 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 growth since May. The unemployment rate remained unchanged at 6.4 percent.
The latest Labour Force Survey revealed a drop of 20,000 public sector jobs for the third consecutive month, while private sector employment remained relatively stable. The manufacturing sector stood out by adding 22,000 jobs in August, whereas public administration, natural resources, and utilities experienced declines.
CIBC chief economist Andrew Grantham highlighted the significance of the manufacturing sector’s job growth in August. He noted that the overall economic indicators, including exports and monthly GDP, suggest a slowdown in the economy in Q3 due to increased uncertainty surrounding U.S. trade relations.
Quebec and Ontario were the most affected regions, losing 19,000 and 18,000 jobs, respectively. Bank of Montreal chief economist Douglas Porter remarked that the recent job report, while softer than expected, was not surprising given Canada’s strong job performance in previous months.
Statistics Canada reported that the average hourly wage growth in August was the slowest in nearly nine years, decreasing to two percent annually from 2.8 percent in July and 3.3 percent in June. Earlier predictions by economists estimated a job increase of 15,000 in August, with the unemployment rate remaining at 6.4 percent.
The recent job data marks a departure from the positive trend seen in previous months, with the Canadian economy adding 75,000 jobs in July and a total of 181,000 jobs between April and July.
The job market challenges come amid ongoing trade tensions between Canada and the U.S., with recent tariff impositions affecting various industries. The Canadian government has introduced a $7.5 billion economic relief program to support impacted workers and businesses in addition to existing tariff support measures.
Industries reliant on U.S. export demand continue to face uncertainty, with higher layoff rates observed in these sectors over the past year. Scotiabank economist Mitch Villeneuve noted a gradual decrease in the share of Canadian exports destined for the U.S., with increased growth in non-U.S. markets, particularly Europe.
In contrast to Canada, the U.S. labor market showed resilience in August, adding 162,000 jobs as reported by the U.S. Labor Department. The unemployment rate in the U.S. remained steady at 4.1 percent. President Donald Trump praised the job numbers, calling for a reduction in interest rates by the Federal Reserve.
Despite the challenges in the job market, many economists expect the Bank of Canada to maintain its policy rate at 2.25 percent for the remainder of the year.