Canada’s job market faced a setback in August, shedding 42,000 positions, according to Statistics Canada. This decline was unexpected as economists had anticipated a fourth straight month of 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 for the third consecutive month, while there was little change in private sector employment. Notably, the manufacturing industry saw a positive trend by adding 22,000 jobs, whereas sectors like public administration, natural resources, and utilities experienced declines.
CIBC’s chief economist Andrew Grantham highlighted the significance of the manufacturing sector’s job growth in August. The data aligns with other indicators, suggesting a slowdown in Canada’s economy in the third quarter following a robust second quarter, amid uncertainties surrounding U.S. trade relations.
Quebec and Ontario were the most affected regions, losing 19,000 and 18,000 jobs, respectively. Bank of Montreal’s chief economist Douglas Porter remarked that the job report, while soft, was not surprising given previous strong results.
Statistics Canada reported that average hourly wage growth in August was the slowest in almost nine years, with a two percent increase on an annualized basis, down from 2.8 percent in July and 3.3 percent in June.
In contrast, the U.S. labor market showed resilience in August, with American employers adding 162,000 jobs as per the U.S. Labor Department. The unemployment rate in the U.S. remained steady at 4.1 percent, with President Donald Trump expressing satisfaction with the job numbers on social media.
The latest job data comes amidst escalating trade tensions between Canada and the U.S., with new tariffs imposed on both sides. In response, the Canadian government unveiled a $7.5 billion economic relief program to support affected workers and businesses, adding to the existing tariff support initiatives.
Concerns persist for industries reliant on U.S. export demand, with higher layoff rates compared to other sectors over the past year. Scotiabank economist Mitch Villeneuve highlighted a gradual decline in the share of Canadian exports heading to the U.S., emphasizing the importance of diversifying trade markets.
Bank of Canada Governor Tiff Macklem noted that while U.S. tariffs impact a limited range of goods, the broader economic implications remain a focus. Despite the contrasting job market trends, Canadian economists anticipate the central bank maintaining its policy rate at 2.25 percent for the foreseeable future.
