Canada’s job market experienced a setback in August as it lost 42,000 jobs, according to Statistics Canada. Economists had anticipated a fourth consecutive month of job gains since May, making the decline unexpected. 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, marking the third consecutive month of decline. Meanwhile, there was little change in private sector employment. The manufacturing sector stood out positively by adding 22,000 jobs, while sectors such as public administration, natural resources, and utilities saw declines.
CIBC’s chief economist, Andrew Grantham, noted that manufacturing was the only sector to significantly increase employment in August. This aligns with other economic indicators suggesting a slowdown in the economy for the third quarter, following a robust second quarter with heightened uncertainties surrounding U.S. trade.
Quebec and Ontario were the most affected regions, shedding 19,000 and 18,000 jobs, respectively. Bank of Montreal’s chief economist, Douglas Porter, described the report as soft but not surprising, considering the previous strong job results.
Statistics Canada reported that average hourly wage growth in August was the slowest in almost nine years, with a decline to two percent on an annual basis from higher rates in previous months. Economists had predicted an increase of 15,000 jobs in August, but the data shows a disruption in the trend of monthly gains, following the addition of 75,000 jobs in July.
The recent job report comes amidst ongoing trade tensions between Canada and the U.S., with both countries imposing tariffs on each other’s products. The Canadian government introduced a $7.5-billion economic relief program for affected workers and businesses, in addition to the previous tariff support measures.
Industries reliant on U.S. export demand continue to face uncertainties, with layoffs higher in those sectors over the past year. The share of Canadian exports destined for the U.S. has gradually decreased, indicating a shift towards non-U.S. markets, particularly in Europe.
While Canada’s job market cooled off in August, the U.S. saw job gains with 162,000 jobs added according to the U.S. Labor Department. President Trump celebrated these numbers, emphasizing the need for the Federal Reserve to lower interest rates. In Canada, the central bank is expected to maintain its policy rate at 2.25 percent for the remainder of the year.