Canada’s job market saw a setback in August, shedding 42,000 jobs, according to Statistics Canada’s report on Friday. This decline was unexpected, as economists had anticipated a fourth consecutive month of job gains since May. The unemployment rate remained unchanged at 6.4 percent for the month.
The latest Labour Force Survey revealed a drop of 20,000 public sector positions, marking a third consecutive monthly decline, while jobs in the private sector remained relatively stable. Notably, the manufacturing industry stood out positively by adding 22,000 jobs, offsetting declines in sectors such as public administration, natural resources, and utilities.
CIBC chief economist Andrew Grantham highlighted the significance of the manufacturing sector’s employment growth in August. He noted that this aligns with other indicators like exports and monthly GDP, suggesting a slowdown in the economy in the third quarter after a robust second quarter, especially given the uncertainties surrounding U.S. trade relations.
The data indicated that Quebec suffered the most job losses, with a decline of 19,000 positions, followed by Ontario with an 18,000 job decrease. Bank of Montreal chief economist Douglas Porter commented that while the job report was softer than expected, it was not entirely surprising given the strong job numbers in previous months.
Statistics Canada reported that the average hourly wage growth in August was the slowest in nearly nine years, with a rate of two percent on an annualized basis, down from 2.8 percent in July and 3.3 percent in June. Economists, in a Reuters poll, had forecasted an addition of 15,000 jobs in August, with an expected unemployment rate of 6.4 percent.
The recent job report ended a streak of monthly gains, with the Canadian economy adding 75,000 jobs in July. However, from April to July, a total of 181,000 jobs were created. These developments come amidst ongoing trade tensions between Canada and the U.S., with recent tariff impositions affecting various industries on both sides.
As the Canadian government rolls out economic relief measures to support impacted workers and businesses, the job market outlook remains uncertain due to the evolving trade dynamics. The agency highlighted that industries reliant on U.S. export demand face challenges, with layoff rates higher compared to other sectors over the past year.
In contrast, the U.S. Labor Department reported positive job growth in August, with American employers adding 162,000 jobs. The unemployment rate in the U.S. remained steady at 4.1 percent for the month. President Trump praised the job numbers, hinting at potential policy actions, whereas in Canada, analysts expect the central bank to maintain its current interest rate through the rest of the year.