Canada’s job market experienced a setback in August, shedding 42,000 positions, as reported by Statistics Canada on Friday. This decline caught some analysts off guard, as they had anticipated a fourth consecutive month of job growth since May. The unemployment rate remained stable at 6.4 percent for the month.
The latest Labour Force Survey revealed a decrease of 20,000 public sector jobs, marking the third consecutive month of decline. Conversely, there was little change in private sector employment. The manufacturing sector stood out in August by adding 22,000 jobs, while areas such as public administration, natural resources, and utilities saw decreases.
According to CIBC chief economist Andrew Grantham, the manufacturing industry was the sole sector to experience a significant increase in employment during August. The data aligns with other indicators, suggesting a slowdown in the economy for Q3 after a robust second quarter, amidst uncertainties surrounding U.S. trade.
Quebec and Ontario were the most affected regions, losing 19,000 and 18,000 jobs, respectively. Bank of Montreal’s chief economist, Douglas Porter, characterized the report as a soft outcome but not entirely surprising, considering the previous strong job results.
Statistics Canada reported that the average hourly wage growth in August hit a nearly nine-year low, with a slowdown to two percent on an annualized basis from 2.8 percent in July and 3.3 percent in June. Economists polled by Reuters had predicted an addition of 15,000 jobs in August, with the unemployment rate staying at 6.4 percent, according to LSEG Data & Analytics.
This data breaks a streak of monthly gains, following the addition of 75,000 jobs in July and a total of 181,000 jobs from April to July. The job report comes amidst ongoing trade tensions between Canada and the U.S., with recent tariffs imposed on both sides affecting various industries.
To support impacted workers and businesses, the federal government introduced a $7.5 billion economic relief program, in addition to the existing tariff support of nearly $25 billion over the past 18 months. Industries reliant on U.S. exports continue to face economic uncertainties, with a higher layoff rate compared to other sectors.
Bank of Canada Governor Tiff Macklem commented on the U.S. tariffs, highlighting their limited impact on a specific range of goods. Meanwhile, south of the border, the U.S. Labor Department reported an increase of 162,000 jobs in August, maintaining an unemployment rate of 4.1 percent. President Donald Trump praised the job figures and hinted at potential actions regarding interest rates and trade deficits.
Despite the challenges, many economists anticipate the Bank of Canada to maintain its policy rate at 2.25 percent for the remainder of the year.