Canada’s job market hit a snag in August, shedding 42,000 jobs, according to Statistics Canada’s latest report. This decline caught some economists off guard, as they had anticipated a fourth consecutive month of job growth following May. The unemployment rate remained unchanged at 6.4 percent for the month.
The report revealed a decrease of 20,000 public sector jobs, marking the third consecutive month of decline in this sector. However, there was little change in private sector employment. Notably, the manufacturing industry stood out by adding 22,000 jobs in August, while sectors such as public administration, natural resources, and utilities experienced declines.
CIBC’s chief economist, Andrew Grantham, highlighted manufacturing as the sole sector with a significant increase in employment for August. This aligns with other economic indicators suggesting a slowdown in the economy for Q3, following a robust second quarter and amid heightened uncertainty surrounding U.S. trade.
Quebec and Ontario bore the brunt of job losses in August, with Quebec losing 19,000 jobs and Ontario shedding 18,000. Bank of Montreal’s chief economist, Douglas Porter, noted that the recent job report, though soft, was not surprising given Canada’s previous strong job results.
Statistics Canada reported that average hourly wage growth in August was the slowest in nearly nine years, with a two percent increase on an annual basis, down from 2.8 percent in July and 3.3 percent in June.
In contrast, the U.S. labor market saw positive growth in August, with American employers adding 162,000 jobs, as reported by the U.S. Labor Department. The U.S. unemployment rate remained steady at 4.1 percent for the month.
Overall, while Canada’s job market faced challenges in August, the U.S. experienced growth. Despite this, many economists anticipate the Bank of Canada maintaining its policy rate at 2.25 percent for the rest of the year. The trade tensions between Canada and the U.S., highlighted by recent tariffs, continue to impact various industries, emphasizing the uncertain economic environment for both countries.