Canada’s job market hit a roadblock in August, shedding 42,000 jobs, according to Statistics Canada’s latest report released on Friday. This decline was unexpected, as economists had anticipated a fourth consecutive month of job gains since May. Despite the job losses, the unemployment rate remained unchanged at 6.4 percent.
The report revealed that the public sector witnessed a decrease of 20,000 jobs for the third month in a row, while the private sector saw minimal changes. The manufacturing sector stood out positively by adding 22,000 jobs in August, while other sectors such as public administration, natural resources, and utilities experienced declines.
CIBC’s chief economist, Andrew Grantham, noted that manufacturing was the only sector with a significant rise in employment during August. This aligns with broader indicators like exports and monthly GDP, suggesting a slowdown in the economy in Q3 amid increased uncertainty in U.S. trade relations.
Quebec and Ontario were the most affected regions, losing 19,000 and 18,000 jobs respectively. Despite the disappointing job figures, Bank of Montreal’s chief economist, Douglas Porter, mentioned that the results were not surprising given the country’s recent strong job performance.
The average hourly wage growth in August was the slowest in nearly nine years, with a decrease to two percent on an annualized basis from 2.8 percent in July and 3.3 percent in June. This slower wage growth trend was in line with expectations from a Reuters poll of economists.
The latest job report comes at a time of strained trade relations between Canada and the U.S. Last month, the U.S. imposed tariffs on Canadian products, prompting Canada to respond with equivalent tariffs on U.S. goods. To support affected workers and businesses, the federal government introduced a $7.5 billion economic relief program in addition to previous tariff supports.
Statistics Canada highlighted that industries relying on U.S. exports are facing economic uncertainty, with higher layoff rates compared to other sectors over the past year. Notably, the share of Canadian exports destined for the U.S. has been decreasing gradually, indicating a shift towards non-U.S. markets like Europe.
While Canada’s job market cooled off in August, the U.S. reported job gains with 162,000 new jobs added last month. President Trump praised the results, urging the Federal Reserve to lower interest rates. In Canada, analysts anticipate the central bank to maintain its policy rate at 2.25 percent for the remainder of the year.