Canada’s job market showed no growth in August, shedding 42,000 positions, according to Statistics Canada’s latest report. This unexpected drop contrasted with economists’ expectations of continued job gains for the fourth straight month. The unemployment rate remained at 6.4%, the agency noted.
The data from the Labour Force Survey indicated a decrease of 20,000 public sector jobs for the third consecutive month, while private sector employment remained relatively stable. Noteworthy was the manufacturing sector, which added 22,000 jobs, while public administration, natural resources, and utilities experienced declines.
CIBC’s chief economist, Andrew Grantham, highlighted the significant employment increase in the manufacturing industry for August. The report aligns with other economic indicators suggesting a slowdown in the third quarter following a robust second quarter, amid uncertainties surrounding U.S. trade relations.
In terms of regional impact, Quebec and Ontario were the most affected, with job losses of 19,000 and 18,000, respectively. Bank of Montreal’s chief economist, Douglas Porter, acknowledged the soft job report as a return to reality after a series of positive results.
Statistics Canada reported that average hourly wage growth in August hit a nearly nine-year low, with a slowdown to two percent annually compared to 2.8% in July and 3.3% in June. Expectations from a Reuters poll of economists were for a gain of 15,000 jobs in August, with the unemployment rate remaining at 6.4%.
The job market data follows a period of growth, with 75,000 jobs added in July and a total of 181,000 jobs created from April to July. The report comes amidst escalating trade tensions between Canada and the U.S., with recent tariff actions impacting various industries.
Additionally, Statistics Canada highlighted the challenges faced by industries reliant on U.S. export demand, noting higher layoff rates compared to other sectors over the past year. The gradual decrease in exports to the U.S. market has been offset by increased exports to non-U.S. markets, particularly Europe.
In contrast, the U.S. labor market saw positive growth in August, adding 162,000 jobs, while revising June and July figures to include an additional 55,000 jobs. The U.S. unemployment rate remained steady at 4.1%. President Trump lauded the job numbers on social media, advocating for a Federal Reserve rate cut.
As Canada navigates economic challenges, analysts anticipate the Bank of Canada maintaining its policy rate at 2.25% for the remainder of the year.
