Canada’s job market experienced a setback in August as Statistics Canada reported a decline of 42,000 jobs, surprising economists who anticipated a fourth consecutive month of growth. The unemployment rate remained at 6.4 percent during the month.
The recent Labour Force Survey revealed a decrease of 20,000 public sector workers for the third consecutive month, while the private sector saw minimal changes. However, the manufacturing sector stood out with an addition of 22,000 jobs in August, offsetting declines in public administration, natural resources, and utilities.
CIBC chief economist Andrew Grantham noted that manufacturing was the only sector showing a significant increase in employment for the month. The report aligns with other indicators such as exports and monthly GDP, pointing to a slowdown in the economy in the third quarter.
Quebec and Ontario were the most affected regions, shedding 19,000 and 18,000 jobs, respectively. Despite the soft job report, Bank of Montreal chief economist Douglas Porter stated that it was not unexpected given Canada’s recent strong job performance.
Average hourly wage growth in August hit a nearly nine-year low, slowing to two percent annually from 2.8 percent in July and 3.3 percent in June. Economists had predicted a job increase of 15,000 in August, maintaining the unemployment rate at 6.4 percent.
The job data release breaks a streak of monthly gains, following a surge of 75,000 jobs in July and a total of 181,000 jobs added from April to July. This comes amidst ongoing trade tensions between Canada and the U.S., with recent tariff impositions on both sides affecting various industries.
Statistics Canada highlighted the uncertainty faced by industries dependent on U.S. export demand, noting higher layoff rates within these sectors over the past year. The shift towards non-U.S. markets in Canadian exports, particularly to Europe, has been increasing steadily.
Meanwhile, the U.S. Labor Department reported a different trend with American employers adding 162,000 jobs in August, maintaining an unemployment rate of 4.1 percent. President Trump expressed optimism over the U.S. job numbers, emphasizing potential impacts on Federal Reserve interest rate decisions and trade policies.
Amidst these developments, the Bank of Canada is expected to maintain its policy rate at 2.25 percent for the remainder of the year, as many economists predict.