Canada’s job market faced setbacks in August, shedding 42,000 positions, according to Statistics Canada. The drop came as a surprise to some experts who had anticipated job gains for the fourth consecutive month since May. The unemployment rate remained unchanged at 6.4 percent during the same period.
In August, there was a decline of 20,000 public sector jobs for the third month in a row, while private sector employment remained relatively stable. The manufacturing sector saw a positive trend, adding 22,000 jobs, while industries like public administration, natural resources, and utilities experienced reductions in employment.
CIBC’s chief economist, Andrew Grantham, highlighted manufacturing as the sole sector showing a significant increase in employment for August. He noted that the latest data aligns with other indicators, such as exports and monthly GDP, pointing to a slowdown in the economy in Q3, with heightened uncertainties surrounding U.S. trade relations.
Quebec and Ontario were the most affected regions, losing 19,000 and 18,000 jobs respectively. Despite the soft job report, Bank of Montreal’s chief economist, Douglas Porter, emphasized that the results were not unexpected given the strong job performance in previous months.
Statistics Canada reported that average hourly wage growth in August hit a nearly nine-year low, with a 2 percent annualized increase, down from 2.8 percent in July and 3.3 percent in June. The forecasted job additions of 15,000 in August, as predicted by a Reuters poll of economists, did not materialize, marking a shift from the previous months’ positive trends.
The recent job figures come amidst escalating trade tensions between Canada and the U.S., with both countries imposing tariffs on each other’s goods. Canada introduced a $7.5 billion economic relief program for affected workers and businesses in response to the trade disputes, supplementing the existing tariff support measures.
Industries reliant on U.S. exports continue to face economic uncertainties, with higher layoff rates compared to other sectors over the past year. The share of Canadian exports destined for the U.S. has been decreasing gradually, indicating a shift towards non-U.S. markets, particularly Europe.
While Canada’s job market cooled off in August, the U.S. reported job gains, with 162,000 new positions added and a steady unemployment rate of 4.1 percent. President Trump responded positively to the U.S. job data, advocating for a rate cut by the Federal Reserve to support economic growth. In contrast, Canadian economists expect the Bank of Canada to maintain its policy rate at 2.25 percent for the remainder of the year.