Canada’s job market showed a setback in August as it lost 42,000 jobs, according to Statistics Canada on Friday. This decline was unexpected by some analysts, who had anticipated a fourth consecutive month of job gains 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 monthly decline, while private sector employment remained relatively unchanged. In a positive note, the manufacturing sector added 22,000 jobs in August, although sectors such as public administration, natural resources, and utilities experienced declines.
CIBC’s chief economist, Andrew Grantham, highlighted the significant increase in manufacturing employment for the month. He noted that this data aligns with other indicators, such as exports and monthly GDP, suggesting a slowdown in the economy in the third quarter following a robust second quarter.
Quebec saw the most significant job losses with 19,000 jobs, followed by Ontario with an 18,000 job decline. Bank of Montreal’s chief economist, Douglas Porter, commented that while the report indicates a softening in job numbers, it was not entirely unexpected.
Statistics Canada reported that average hourly wage growth in August was the slowest in nearly nine years, with a slowdown to two percent on an annualized basis from 2.8 percent in July and 3.3 percent in June.
The recent jobs report follows a series of monthly gains, with the Canadian economy adding 75,000 jobs in July and a total of 181,000 jobs from April to July.
The ongoing trade tensions between Canada and the U.S. have added to economic uncertainties. Last month, President Donald Trump imposed 50 percent tariffs on around $28 billion worth of Canadian goods, prompting Canada to retaliate with equivalent tariffs on $27.6 billion of U.S. products.
In response to the economic impacts, the Canadian government introduced a $7.5 billion expanded relief program to support affected workers and businesses. This additional support is in addition to the nearly $25 billion in tariff relief implemented over the past 18 months.
Industries reliant on U.S. exports continue to face an uncertain economic environment, as noted by Statistics Canada. The agency highlighted higher layoff rates in these industries over the past year leading up to August.
Meanwhile, the U.S. Labor Department reported job gains of 162,000 in August, with a steady unemployment rate of 4.1 percent. President Trump expressed optimism over these numbers and urged the Federal Reserve to lower interest rates further to support economic growth.
Many economists in Canada anticipate the central bank to maintain its policy rate at 2.25 percent through the remainder of the year, amid economic uncertainties and global trade tensions.