Canada’s job market showed a setback in August, shedding 42,000 jobs, according to Statistics Canada’s report released on Friday. This decline came as a surprise to some experts who had anticipated a fourth consecutive month of job gains since May. Despite this, the unemployment rate remained unchanged at 6.4%.
The report revealed a decrease of 20,000 public sector jobs for the third consecutive month, while private sector employment remained relatively stable. The manufacturing sector stood out positively by adding 22,000 jobs in August, whereas industries such as public administration, natural resources, and utilities experienced declines.
Chief economist Andrew Grantham from CIBC highlighted that only the manufacturing sector saw a significant increase in employment during August. This data aligns with other indicators like exports and monthly GDP, suggesting a slowdown in the economy for Q3 following a robust second quarter.
Quebec was the most affected region, losing 19,000 jobs, followed by Ontario with an 18,000 job loss. Despite the disappointing report, economists like Douglas Porter from the Bank of Montreal noted that the soft results were not entirely unexpected given the previous strong job performance in Canada.
Average hourly wage growth in August hit its slowest pace in nearly nine years, with a 2% increase annually compared to 2.8% in July and 3.3% in June. Economists in a Reuters poll had predicted a gain of 15,000 jobs in August, with the unemployment rate remaining at 6.4%.
This decline in jobs comes amid ongoing trade tensions between Canada and the United States. President Donald Trump recently imposed tariffs on Canadian products, prompting retaliatory measures from Canada. The Canadian government introduced a $7.5 billion relief program to support affected workers and businesses, in addition to the existing tariff support initiatives.
Statistics Canada pointed out that industries reliant on U.S. export demand are facing economic uncertainty, with higher layoff rates compared to other sectors. The agency highlighted a gradual decrease in the share of Canadian exports to the U.S., emphasizing an increase in exports to non-U.S. markets, particularly Europe.
While Canada experienced job losses, the U.S. job market saw a different trend in August. The U.S. Labor Department reported an addition of 162,000 jobs, with revised figures from June and July showing an extra 55,000 jobs. The U.S. unemployment rate remained steady at 4.1% in August.
President Trump lauded the U.S. job numbers on social media, hinting at the possibility of a Federal Reserve interest rate cut. In contrast, Canadian economists expect the Bank of Canada to maintain its policy rate at 2.25% for the remainder of the year.