Canada’s job market experienced a setback in August, shedding 42,000 jobs, according to Statistics Canada’s latest report. This decline was unexpected, as economists had anticipated continued job growth for the fourth consecutive month since May. The unemployment rate remained unchanged at 6.4 percent.
The report revealed a decrease of 20,000 public sector jobs for the third straight month, while private sector employment remained relatively stable. The manufacturing sector stood out with an addition of 22,000 jobs, while industries like public administration, natural resources, and utilities saw declines.
CIBC’s chief economist, Andrew Grantham, noted that manufacturing was the only sector to see a significant increase in employment in August. There are concerns that the economy is slowing down in the third quarter following a robust second quarter, especially with uncertainties surrounding U.S. trade.
Quebec and Ontario were the hardest-hit provinces, losing 19,000 and 18,000 jobs, respectively. The slowest average hourly wage growth in nearly nine years was reported for August, with a 2 percent increase on an annualized basis, down from 2.8 percent in July and 3.3 percent in June.
The jobs report contradicted expectations from a Reuters poll of economists, which had forecasted a gain of 15,000 jobs in August while maintaining the 6.4 percent unemployment rate. This data follows a series of monthly job gains, with 75,000 jobs added in July and a total of 181,000 jobs from April to July.
The ongoing trade tensions between Canada and the U.S. are impacting various industries, with recent tariff implementations affecting both economies. To support affected workers and businesses, the Canadian government introduced a $7.5-billion economic relief program in addition to existing tariff support measures.
Statistics Canada highlighted the challenges faced by industries relying on U.S. export demand due to the uncertain economic environment. The share of Canadian exports to the U.S. has gradually decreased, with a shift towards non-U.S. markets, particularly Europe.
In contrast, the U.S. labor market showed resilience in August, with employers adding 162,000 jobs and revising June and July payroll figures to include an additional 55,000 jobs. The unemployment rate in the U.S. remained steady at 4.1 percent.
President Trump praised the U.S. job numbers, emphasizing the need for the Federal Reserve to lower interest rates further. Economists in Canada anticipate the central bank to maintain its policy rate at 2.25 percent for the remainder of the year.