Canada’s job market faced a setback in August as it shed 42,000 jobs, according to Statistics Canada’s latest report released on Friday. This decline came as a surprise to some analysts who had anticipated continued job growth for the fourth consecutive month since May. The unemployment rate remained unchanged at 6.4 percent during the same period.
The data from the Labor Force Survey revealed a decrease of 20,000 public sector positions, marking the third consecutive monthly decline in this sector. Conversely, there was little change in private sector employment. Notably, the manufacturing industry stood out by adding 22,000 jobs in August, while sectors such as public administration, natural resources, and utilities experienced declines.
CIBC’s chief economist, Andrew Grantham, noted that manufacturing was the sole sector to exhibit a significant upsurge in employment during August. He further highlighted that the current data aligns with other economic indicators, suggesting a slowdown in the economy during the third quarter, following a robust second quarter and amid uncertainties surrounding U.S. trade relations.
On a regional level, Quebec and Ontario were most impacted by job losses, shedding 19,000 and 18,000 jobs, respectively. Bank of Montreal’s chief economist, Douglas Porter, acknowledged that while the report reflects a softening job market, it was not entirely unexpected.
Statistics Canada reported that the average hourly wage growth in August was the slowest in nearly nine years, declining to two percent on an annualized basis from 2.8 percent in July and 3.3 percent in June.
The data contradicted the expectations of a Reuters poll of economists, which had projected an addition of 15,000 jobs in August, with the unemployment rate remaining at 6.4 percent. This report breaks a streak of positive job gains, with the Canadian economy having added 75,000 jobs in July and a total of 181,000 jobs from April to July.
The latest figures come against the backdrop of escalating trade tensions between Canada and the United States, with recent tariff measures imposed by both countries affecting various industries. In response to these challenges, the Canadian government introduced a $7.5 billion expanded economic relief program to support impacted workers and businesses.
Furthermore, Statistics Canada highlighted the uncertain economic environment faced by industries reliant on U.S. export demand. The agency noted a higher layoff rate in these sectors over the past year leading up to August, emphasizing the gradual shift in Canadian exports towards non-U.S. markets, particularly Europe.
While Canada experienced a slowdown in its labor market, the United States reported a different trend with the addition of 162,000 jobs in August, according to the U.S. Labor Department. President Donald Trump lauded this job growth on social media and advocated for a reduction in the Federal Reserve’s interest rates to further stimulate economic activity.
Despite these contrasting job market performances, many economists anticipate the Bank of Canada to maintain its current policy rate at 2.25 percent throughout the remainder of the year.