In August, Canada’s job market hit a setback, shedding 42,000 positions, according to Statistics Canada. This decline was unexpected, as analysts had anticipated a fourth consecutive month of job growth since May. Despite this, the unemployment rate remained unchanged at 6.4 percent.
The latest Labour 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, whereas public administration, natural resources, and utilities experienced declines.
CIBC chief economist Andrew Grantham highlighted manufacturing as the sole sector with a significant increase in employment during August. He linked the slowdown in the economy in the third quarter to factors like exports and monthly GDP, amid heightened uncertainty surrounding U.S. trade relations.
Quebec and Ontario were the most impacted regions, losing 19,000 and 18,000 jobs respectively. Bank of Montreal chief economist Douglas Porter noted that after a series of robust job reports, a softening was expected, emphasizing that the latest results were not surprising.
Statistics Canada reported that the average hourly wage growth in August was the slowest in nearly nine years, with a decrease to two percent on an annualized basis from 2.8 percent in July and 3.3 percent in June.
The job data contrasts the recent trade tensions between Canada and the U.S., with President Donald Trump imposing tariffs on Canadian products, reciprocated by Canada. In response, the Canadian government introduced a $7.5-billion economic relief program to support affected workers and businesses.
Industries reliant on U.S. export demand face uncertainties, with higher layoff rates compared to other sectors over the past year. Scotiabank economist Mitch Villeneuve noted a gradual reduction in the share of Canadian exports to the U.S., with increasing trade to non-U.S. markets, particularly Europe.
While Canada’s job market cooled in August, the U.S. Labor Department reported a positive trend, with American employers adding 162,000 jobs. Trump praised the job numbers, advocating for a Federal Reserve interest rate cut. In Canada, analysts predict the central bank maintaining its policy rate at 2.25 percent for the remainder of the year.