Canada’s job market experienced a setback in August, shedding 42,000 jobs, according to Statistics Canada’s latest report released on Friday. This decline caught some analysts off guard as they were anticipating a fourth consecutive month of job gains since May. The unemployment rate remained unchanged at 6.4 percent for the month.
The report highlighted a decrease of 20,000 public sector jobs for the third straight month, while jobs in the private sector remained relatively stable. However, the manufacturing sector stood out with a significant increase of 22,000 jobs in August. Conversely, sectors such as public administration, natural resources, and utilities saw declines in employment figures.
CIBC’s chief economist, Andrew Grantham, noted that manufacturing was the only sector showing notable job growth in August. He mentioned that this trend aligns with other economic indicators like exports and monthly GDP, pointing towards a slowdown in the economy in the third quarter amid heightened trade uncertainty with the U.S.
Quebec and Ontario were the most affected regions, losing 19,000 and 18,000 jobs, respectively. Bank of Montreal’s chief economist, Douglas Porter, commented that after a series of strong job reports, a more subdued outcome was expected, although not entirely surprising.
Statistics Canada reported a slowdown in average hourly wage growth in August, reaching its lowest level in nearly nine years at two percent annually, down from 2.8 percent in July and 3.3 percent in June. Prior to this, a Reuters poll of economists had projected an addition of 15,000 jobs in August, with the unemployment rate staying at 6.4 percent.
This latest data marks a departure from the positive trend seen in previous months. The Canadian economy had added 75,000 jobs in July, contributing to a total of 181,000 job gains from April to July.
The job market challenges come amidst ongoing trade tensions between Canada and the U.S. following recent tariff impositions by both countries. To support affected workers and businesses, the Canadian government introduced a $7.5 billion economic relief program, in addition to the previous tariff support measures amounting to nearly $25 billion over the past year and a half.
Industries reliant on U.S. export demand continue to face uncertainties, with higher layoff rates compared to other sectors over the past year. Scotiabank economist Mitch Villeneuve highlighted a shift towards non-U.S. markets for Canadian exports, especially in Europe, as a driving force behind this trend.
While Canada saw a decline in job numbers, the U.S. reported an addition of 162,000 jobs in August, with a steady unemployment rate of 4.1 percent. President Trump lauded the U.S. job figures on social media, emphasizing the need for the Federal Reserve to lower interest rates to support economic growth.
Despite these developments, many economists expect the Bank of Canada to maintain its policy rate at 2.25 percent for the remainder of the year, given the current economic landscape.
