Canada lost 41,700 jobs in August, reversing a run of hiring from April through July, while the unemployment rate remained unchanged at 6.4%, Statistics Canada reported Friday. The decline was weaker than economists had expected, with analysts surveyed by Reuters forecasting an increase of about 15,000 jobs.
The drop in jobs is occurring less than a week before Canada is set to implement new counter-tariffs on U.S. products. The August Labor Force Survey covers conditions during the week of Aug. 9-15, meaning the figures largely predate the latest tariff measures that will take effect Sept. 8.
The report therefore offers a snapshot of Canada’s labor market before the latest phase of the Canada-U.S. trade dispute takes effect. Statistics Canada said industries dependent on U.S. export demand continue to face an uncertain economic environment following the imposition of new U.S. tariffs.
What Drove the August Job Losses?
Statistics Canada reported a drop of 35,900 full-time jobs in August and 5,800 part-time jobs. The decrease in employment overall was concentrated in a few industries, such as building and other support services, business, public administration and natural resources and utilities.
In contrast, manufacturing grew by 1.2% in the month, with 22,000 additional jobs. Quebec lost 19,000 jobs; Ontario lost 18,000 jobs, and New Brunswick gained 2,400. In the other provinces, employment growth was virtually unchanged.
The public sector lost 20,000 jobs, a drop of 0.4%, the third monthly drop. The number of people working in the public sector has decreased by 78,000 or 1.7% since May, Statistics Canada reported. Employment in the private sector and self-employment remained virtually unchanged from July.
Summer Hiring Streak Comes to an End
From April to July, the economy gained 181,000 jobs, but that growth was interrupted by an increase in the number of people without jobs in August. The monthly decline in employment was a mere 1% from a year earlier, at 217,000.
After declining by a total of 0.5 percentage points over the previous three months (May, June and July), the unemployment rate remained at 6.4%. According to Statistics Canada, some 1.5 million were out of work in August, of which 24% were in long-term unemployment, having been looking for jobs for the past 27 weeks or more.
The labor force participation rate dropped by 0.1 percentage points to 65%. The labor force shrank in August with the employment rate declining 0.1 percentage point to 60.8%, said Statistics Canada.
Youth Unemployment Rises
Young workers saw a deterioration in August. Employment among people ages 15 to 24 fell by 19,000, or 0.7%, while the youth unemployment rate rose 0.3 percentage points to 12.9%.
The increase interrupted a 1.7-percentage-point decline in the youth unemployment rate between April and July. Even after the August increase, the youth unemployment rate remained 1.4 percentage points below its level a year earlier.
Average hourly wages among employees increased 2% year over year in August, reaching $37.02, compared with 2.8% growth in July, Statistics Canada said.
Trump Tariffs Add to the Economic Uncertainty
The jobs report comes as Canada and the United States enter another stage of their trade dispute.
On Aug. 21, Canadian Prime Minister Mark Carney announced that Ottawa was suspending trade negotiations with Washington. He said the U.S. planned to impose a 50% tariff on roughly $28 billion of Canadian goods and said Canada would respond with matching tariffs.
The following day, Carney told provincial and territorial premiers that Canada would introduce dollar-for-dollar counter-tariffs and additional support for workers and businesses affected by U.S. tariffs.
In his Aug. 22 remarks, Carney said, “Canada will match Washington’s new tariffs dollar for dollar to protect Canadian workers, farmers, families, and businesses.”
Canada’s Finance Department said the new counter-tariffs will cover $27.6 billion in U.S. imports and will take effect at 12:01 a.m. Sept. 8. Rates of 15%, 25% and 50% will apply depending on the product, with measures focused on areas including steel and aluminum, dairy, appliances, agricultural equipment, pulp and paper, plastics and electronics.
Canada’s new measures follow the U.S. decision to impose a 50% tariff on $27.6 billion of Canadian goods effective Aug. 22. Existing Canadian counter-tariffs, including those covering U.S. autos, will remain in place.
At the time of the trade talks’ suspension, Carney described the new U.S. tariffs as “a miscalculation” and said the administration’s demands were “uneconomic, unfair” and had “undermined the net benefits for Canada.”
What Could Happen to Canadian Jobs Next?
The August employment figures do not establish that tariffs caused the job losses. The Labor Force Survey reference period preceded Canada’s Sept. 8 counter-tariffs, while Statistics Canada said export-dependent industries were already operating in an uncertain environment following new U.S. tariffs.
The timing nevertheless makes the labor market an important indicator to watch as the new tariff measures take effect.
The Canadian government has announced a $7.5 billion package of new and enhanced measures for workers and businesses affected by U.S. tariffs, in addition to nearly $25 billion in support provided since the tariff dispute began.
“We will be mobilizing our network of businesses in all regions and all sectors to brace for impact and make the best of a bad situation,” said Candace Laing, CEO of the Canadian Chamber of Commerce.
“What we need to see from the government right now is to shore up support for workers,” said Bea Bruske of the Canadian Labour Congress. “That should mean extending employment insurance and increasing employment insurance.”
Carney has said Ottawa will announce additional support measures for affected industries. The next Statistics Canada Labour Force Survey, covering September conditions, is scheduled for Oct. 9.
