Canada’s job market saw a setback in August as it shed 42,000 jobs, according to Statistics Canada’s latest report released on Friday. This decline was unexpected, with many economists anticipating a continuation of the job growth trend seen since May. The unemployment rate remained unchanged at 6.4 percent for the month.
The report revealed that the public sector workforce decreased by 20,000 jobs for the third consecutive month, while the private sector experienced minimal change in job numbers. Notably, the manufacturing industry showed strength by adding 22,000 jobs in August, although sectors like public administration, natural resources, and utilities saw declines.
CIBC’s chief economist, Andrew Grantham, highlighted the significance of the manufacturing sector’s job growth in August. He noted that this sector was the only one to experience a notable increase in employment. The data aligns with other economic indicators, such as exports and monthly GDP, suggesting a slowdown in the economy in the third quarter following a robust second quarter.
Quebec and Ontario were the most impacted regions, losing 19,000 and 18,000 jobs, respectively. Despite the soft job report, Bank of Montreal’s chief economist, Douglas Porter, mentioned that the results were not surprising given the strong job performance in previous months.
Statistics Canada also reported a slowdown in average hourly wage growth, which dropped to two percent annually in August, the slowest rate in nearly nine years. This decline follows rates of 2.8 percent in July and 3.3 percent in June.
The job market data comes amidst ongoing trade tensions between Canada and the U.S., with recent tariffs imposed on both sides affecting various industries. To support impacted workers and businesses, the Canadian government introduced a $7.5 billion expanded economic relief program in addition to the existing tariff support measures.
In contrast, the U.S. Labor Department reported a positive trend in job growth for August, with American employers adding 162,000 jobs. President Donald Trump praised the results on social media, emphasizing the need for the Federal Reserve to lower interest rates. However, many economists in Canada anticipate the central bank to maintain its policy rate at 2.25 percent for the remainder of the year.