Canada’s job market hit a snag in August, shedding 42,000 jobs, according to Statistics Canada on Friday. This drop caught some economists off guard as they had anticipated a fourth consecutive month of job growth since May.
The unemployment rate remained stable at 6.4 percent last month, the agency reported. The most recent Labour Force Survey indicated a decrease of 20,000 public sector jobs for the third consecutive month, with minimal changes in the private sector.
Despite this trend, the manufacturing industry saw a positive change in August, adding 22,000 jobs. Conversely, sectors like public administration, natural resources, and utilities experienced declines.
CIBC’s chief economist, Andrew Grantham, noted, “Manufacturing was the sole sector that saw a significant rise in employment during August.” He further mentioned that the current data aligns with other economic indicators, suggesting a slowdown in the economy in Q3 due to increased uncertainty in U.S. trade relations.
Regionally, Quebec took the hardest hit, losing 19,000 jobs, followed by Ontario with an 18,000 job loss. Bank of Montreal’s chief economist, Douglas Porter, remarked that after a series of strong job reports, a soft report like this was expected.
Statistics Canada reported that average hourly wage growth in August was the slowest in nearly nine years, with a two percent increase on an annual basis, down from 2.8 percent in July and 3.3 percent in June.
A Reuters poll had predicted a job increase of 15,000 in August, with an expected unemployment rate of 6.4 percent. This data breaks a streak of monthly gains, with Canada adding 75,000 jobs in July and 181,000 jobs from April to July.
The recent job report comes amidst escalating trade tensions between Canada and the U.S., with significant tariffs imposed on each other’s products. To support affected workers and businesses, the federal government introduced a $7.5 billion expanded economic relief program, in addition to the $25 billion in tariff support provided over the past 18 months.
Industries reliant on U.S. export demand continue to face economic uncertainties, with higher layoff rates observed in these sectors over the past year. Scotiabank economist Mitch Villeneuve highlighted the shift towards non-U.S. markets in Canadian exports, particularly to Europe.
While Canada’s job market cooled in August, the U.S. reported a different scenario. The U.S. Labor Department announced that American employers added 162,000 jobs last month, with revised figures adding a combined 55,000 jobs in June and July. The U.S. unemployment rate remained steady at 4.1 percent in August.
President Trump praised the job numbers on social media, urging the Federal Reserve to lower interest rates further. Meanwhile, in Canada, many economists anticipate the central bank to maintain its policy rate at 2.25 percent for the remainder of the year.
