Canada’s job market faced a setback in August, shedding 42,000 jobs, according to Statistics Canada. This decline came as a surprise to some experts 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 public sector jobs, marking the third straight month of decline in this sector. However, employment levels in the private sector remained relatively stable. Notably, the manufacturing industry showed strength by adding 22,000 jobs in August, while sectors such as public administration, natural resources, and utilities experienced declines.
CIBC’s chief economist, Andrew Grantham, noted that manufacturing was the sole sector to see a significant increase in employment during August. This aligns with other economic indicators suggesting a slowdown in the economy for Q3 following a robust second quarter, particularly due to uncertainty surrounding U.S. trade.
Quebec and Ontario were the provinces most affected, with Quebec losing 19,000 jobs and Ontario shedding 18,000 positions. Despite the soft job report, Bank of Montreal’s chief economist, Douglas Porter, mentioned that the results were not shocking given the recent strong job performance in Canada.
Statistics Canada reported that average hourly wage growth in August hit its slowest pace in nearly nine years, dropping to two percent annually from 2.8 percent in July and 3.3 percent in June. A Reuters poll of economists had projected a job increase of 15,000 for August, with the unemployment rate holding steady at 6.4 percent.
The recent data marked a reversal from the positive trend seen in previous months. The Canadian economy added 75,000 jobs in July, contributing to a total of 181,000 job gains from April to July.
Concerns over trade tensions between Canada and the U.S. loom large, with President Donald Trump imposing tariffs on Canadian products, reciprocated by Canada. To support affected workers and businesses, the Canadian government introduced a $7.5 billion expanded economic relief program on top of existing tariff support initiatives.
Industries reliant on U.S. export demand continue to navigate an uncertain economic landscape, with higher layoff rates observed over the past 12 months leading up to August. Scotiabank economist Mitch Villeneuve highlighted a gradual shift in Canadian exports away from the U.S. market toward non-U.S. markets, particularly Europe.
While Canada’s job market faced challenges, the U.S. labor market saw growth in August, adding 162,000 jobs, according to the U.S. Labor Department. President Trump lauded the job numbers and called for a potential interest rate cut by the Federal Reserve. In contrast, many economists anticipate the Bank of Canada to maintain its policy rate at 2.25 percent for the remainder of the year.
