Canada’s labor market is losing momentum — how much did employment decline, and did the “dispute” with the US have an impact?
Kyiv • UNN
In August, Canada lost 41,700 jobs, while unemployment remained at 6.4%. New US tariffs threaten further slowdown.
In August, Canada's economy lost 41,700 jobs, signaling a sharp slowdown in hiring after an exceptionally active summer period; meanwhile, the unemployment rate remained unchanged at 6.4%, reports UNN, citing Reuters.
Details
The August report provides one of the last "clean" pictures of the state of Canada's labor market before the effects of new 50% tariffs imposed by U.S. President Donald Trump begin to affect the economy.
These tariffs affect a relatively small share of Canadian exports, but they target vulnerable industries — including wood product manufacturing — increasing the risk that the recent growth in labor-market activity could practically evaporate.
Analysts surveyed by Reuters had forecast an increase of approximately 15,000 jobs (following a significant increase of 75,100 in July). The forecast for the unemployment rate matched the actual figure.
The Canadian dollar fell 0.51% to 1.3860 Canadian dollars per U.S. dollar (or 72.15 U.S. cents). The yield on two-year government bonds rose after the labor-market data were published, increasing by 1.3 basis points to 2.469%.
According to Statistics Canada, the main reduction in employment occurred in the full-time sector (down 35,900 positions), while the number of part-time jobs decreased by 5,800.
Recent hiring figures were inflated by temporary factors, such as hiring staff to conduct the census and work related to the FIFA World Cup; together, these factors generated an increase of 181,000 jobs from April to July.
The growth in recent months was also explained by the fact that the economy as a whole demonstrated considerable resilience to U.S. trade restrictions that have been in effect for more than 18 months, and mass layoffs have so far been avoided.
However, the entry into force of the new U.S. tariffs and Canada's retaliatory measures (starting early next week) is expected to slow this growth somewhat. Four out of five members of the labor force are employed in the services sector, including health care, education, transportation, and finance; this sector bore the brunt of the employment decline in August.
According to Statistics Canada (StatsCan), 51,500 jobs were eliminated in this sector in August; the greatest losses occurred in industries such as business and support services (including building services), as well as wholesale and retail trade.
The unemployment rate remained at its lowest level in two years, despite the economy facing a wave of tariffs imposed by the Trump administration.
Slower labor-force growth, caused by stricter immigration rules and an aging workforce, also contributed to improved unemployment figures in recent months.
The labor force, which stood at 22.632 million people, declined for the first time since February.
The youth unemployment rate rose by 0.3 percentage points in August, reaching 12.9%, interrupting the downward trend observed from April through July.
Average hourly wages for permanent employees — an important indicator of inflationary pressures — fell to 2% in August (from 3% a month earlier), reaching their lowest level in more than seven years (excluding the pandemic period).