Canada’s job market experienced a setback in August, shedding 42,000 positions, according to Statistics Canada’s latest report released on Friday. This decline caught some economists off guard, as they had anticipated a fourth consecutive month of job gains since May. The unemployment rate remained unchanged at 6.4% for the month.
The report revealed a decrease of 20,000 public sector jobs, marking the third consecutive monthly decline, while employment in the private sector saw minimal change. Notably, the manufacturing industry saw a positive trend by adding 22,000 jobs in August, in contrast to sectors like public administration, natural resources, and utilities which reported declines.
CIBC’s chief economist, Andrew Grantham, pointed out that manufacturing was the sole sector to exhibit a significant increase in employment during August. This aligns with broader economic indicators, such as exports and monthly GDP, suggesting a slowdown in the economy in the third quarter following a robust second quarter, amid heightened uncertainty surrounding U.S. trade policies.
Regionally, Quebec faced the most severe job losses, shedding 19,000 positions, followed by Ontario with an 18,000-job decrease. Bank of Montreal’s chief economist, Douglas Porter, noted that after a series of robust job reports, a more subdued outcome was expected, indicating that while the latest report is soft, it was not entirely unexpected.
Statistics Canada also reported that average hourly wage growth in August hit its slowest pace in nearly nine years, with a 2% increase on an annualized basis, down from 2.8% in July and 3.3% in June. In contrast, a Reuters poll of economists had projected an addition of 15,000 jobs in August, with the unemployment rate remaining steady at 6.4%.
The release of this data follows a period of consistent job gains, with the Canadian economy adding 75,000 jobs in July and a total of 181,000 jobs from April to July. The current economic climate is further complicated by ongoing trade tensions between Canada and the U.S., with recent tariff impositions affecting various industries on both sides.
Looking ahead, many economists anticipate the Bank of Canada to maintain its policy rate at 2.25% for the remainder of the year, amid evolving trade dynamics and global economic uncertainties.
