Canada’s job market saw a setback in August, shedding 42,000 jobs, according to Statistics Canada. This decline was unexpected, as economists had anticipated a fourth consecutive month of job gains since May. The unemployment rate remained unchanged at 6.4 percent for the month.
The latest Labour Force Survey revealed a drop of 20,000 public sector workers, marking the third consecutive monthly decline, while the private sector saw minimal changes in job numbers. One positive note was the manufacturing industry, which added 22,000 jobs in August, in contrast to sectors like public administration, natural resources, and utilities that experienced declines.
CIBC chief economist Andrew Grantham noted that manufacturing was the only sector showing a significant increase in employment during August. The recent data aligns with other economic indicators suggesting a slowdown in the third quarter following a robust second quarter, amid heightened uncertainty surrounding U.S. trade relations.
Quebec and Ontario were the hardest-hit regions, losing 19,000 and 18,000 jobs, respectively. Bank of Montreal chief economist Douglas Porter mentioned that after a series of strong job reports, a reality check was expected for Canada. The report, though soft, was not surprising.
Statistics Canada reported that average hourly wage growth in August was the slowest in nearly nine years, with a two percent annualized increase, down from 2.8 percent in July and 3.3 percent in June.
The job market news comes at a time of historic trade tensions between Canada and the U.S., with recent tariff impositions affecting various industries. The Canadian government has introduced a $7.5 billion expanded economic relief program for impacted workers and businesses, in addition to the previously implemented tariff supports totaling nearly $25 billion.
In the U.S., the Labor Department reported an addition of 162,000 jobs in August, with the unemployment rate holding steady at 4.1 percent. President Donald Trump lauded the job numbers, suggesting a potential interest rate drop by the Federal Reserve to further boost the economy.
Despite the challenges, many economists anticipate that the Bank of Canada will maintain its policy rate at 2.25 percent for the remainder of the year, keeping a watchful eye on the evolving economic landscape.