Canada’s job market faced a setback in August, shedding 42,000 positions, according to Statistics Canada. This decline was unexpected, as analysts had anticipated a fourth consecutive month of growth since May. The unemployment rate remained unchanged at 6.4 percent during the same period.
The latest Labor Force Survey revealed a decrease of 20,000 public sector jobs for the third consecutive month, while private sector employment remained relatively stable. Notably, the manufacturing industry saw a positive trend by adding 22,000 jobs, while sectors such as 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, noting it as the sole sector with a notable employment increase. This aligns with broader economic indicators pointing towards a deceleration in the economy during Q3, following a robust second quarter, exacerbated by 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 acknowledged the softer job report but emphasized that it was not entirely unexpected given recent robust job figures.
Statistics Canada reported a slowdown in average hourly wage growth in August, reaching its lowest rate in nearly nine years. The annualized growth rate dropped to two percent compared to 2.8 percent in July and 3.3 percent in June.
The recent job data contrasts with previous months of gains, where the Canadian economy added 75,000 jobs in July alone. The ongoing trade tensions between Canada and the U.S., marked by tariff impositions on various products, have created challenges for multiple industries.
To support affected workers and businesses, the Canadian government introduced a $7.5 billion expanded economic relief program, supplementing the existing tariff support measures totaling nearly $25 billion over the past 18 months.
Despite the challenges, Canada’s central bank is expected to maintain its policy rate at 2.25 percent for the remainder of the year. Meanwhile, in the U.S., the labor market showed resilience in August, with employers adding 162,000 jobs and the unemployment rate holding steady at 4.1 percent. President Donald Trump praised the job numbers and advocated for a Federal Reserve interest rate cut to further stimulate the economy.
