Canada’s job market faced a setback in August, shedding 42,000 jobs, according to Statistics Canada’s report on Friday. This decline came as a surprise to some experts who had expected a fourth consecutive month of job gains since May.
The unemployment rate remained unchanged at 6.4% for the month, the agency confirmed. The latest Labour Force Survey revealed a drop of 20,000 public sector jobs, marking the third consecutive monthly decline, while the private sector saw minimal change in job numbers.
In a positive turn, the manufacturing sector showed growth by adding 22,000 jobs in August. However, sectors such as public administration, natural resources, and utilities experienced declines during the same period.
CIBC’s chief economist Andrew Grantham noted that the manufacturing industry was the sole sector to see a significant increase in employment in August. He also pointed out that recent data, including exports and monthly GDP, suggests a slowdown in the economy in the third quarter, with added uncertainty surrounding U.S. trade relations.
Quebec bore the brunt of job losses, shedding 19,000 positions, followed by Ontario with an 18,000 job decrease. Bank of Montreal’s chief economist Douglas Porter acknowledged the softness of the report but highlighted that it was not entirely unexpected given the recent strong job results.
Statistics Canada reported a slowdown in average hourly wage growth in August, marking the slowest rate in almost nine years. The annualized growth rate dipped to two percent from 2.8 percent in July and 3.3 percent in June.
Despite predictions from a Reuters poll of economists anticipating a gain of 15,000 jobs in August, the reality was a decline, snapping a streak of monthly job increases. This follows a period where the Canadian economy added a total of 181,000 jobs from April to July.
The latest employment figures come amidst ongoing trade tensions between Canada and the U.S., with significant tariffs imposed on various products by both countries. As a response to the economic impacts, the Canadian government introduced a $7.5 billion relief program for affected workers and businesses, in addition to previous tariff support measures.
Industries reliant on U.S. exports continue to face uncertainty, with Statistics Canada highlighting higher layoff rates in these sectors over the past year. The agency noted a gradual decrease in the share of Canadian exports destined for the U.S., with a shift towards non-U.S. markets, particularly Europe.
While Canada’s job market cooled in August, the U.S. reported job gains, adding 162,000 positions last month. President Trump welcomed the news, emphasizing the strength of the numbers and calling for a potential interest rate cut by the Federal Reserve. Meanwhile, in Canada, experts anticipate the central bank to maintain its policy rate at 2.25 percent for the remainder of the year.
