Canada experienced a setback in its labor market during August, with a loss of 42,000 jobs as reported by Statistics Canada on Friday. This decline surprised some experts, as they had anticipated a fourth consecutive month of job gains since May. The unemployment rate remained stable at 6.4 percent for the month.
According to the latest Labour Force Survey, there was a decrease of 20,000 public sector jobs for the third consecutive month, while private sector employment remained relatively unchanged. Notably, the manufacturing industry saw a positive trend by adding 22,000 jobs in August, while sectors such as public administration, natural resources, and utilities witnessed declines.
CIBC’s chief economist, Andrew Grantham, highlighted the significant employment growth in the manufacturing sector for August. This aligns with other economic indicators, suggesting a slowdown in the economy in the third quarter following a robust second quarter, amidst increased uncertainty surrounding U.S. trade.
In terms of regional impact, Quebec and Ontario were the most affected, losing 19,000 and 18,000 jobs respectively. Bank of Montreal’s chief economist, Douglas Porter, noted that the recent job report reflects a softening trend in the labor market, following a period of strong job growth.
Statistics Canada reported that 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. Expectations from a Reuters poll of economists had predicted an addition of 15,000 jobs in August, with the unemployment rate remaining at 6.4 percent.
This data marks a halt to a series of monthly job gains, with 75,000 jobs added in July and a total of 181,000 jobs between April and July. The latest jobs report comes amidst ongoing trade tensions between Canada and the U.S., with recent tariff impositions affecting various industries.
To mitigate the impact, the Canadian government has introduced a $7.5 billion expanded economic relief program for affected workers and businesses, in addition to existing tariff support measures. Industries reliant on U.S. export demand continue to face economic uncertainty, with higher layoff rates observed in these sectors over the past year.
Meanwhile, south of the border, the U.S. Labor Department reported job gains of 162,000 in August, with revised figures for June and July adding a combined 55,000 jobs. The U.S. unemployment rate remained unchanged at 4.1 percent. President Donald Trump celebrated the positive U.S. job numbers and called for a Federal Reserve interest rate reduction to further stimulate economic growth. In Canada, many economists anticipate the central bank to maintain its policy rate at 2.25 percent for the remainder of the year.