Statistics Canada reported on Friday that Canada’s job market experienced a standstill in August, resulting in a loss of 42,000 jobs. This unexpected downturn took many economists by surprise, as they had anticipated another month of job increases following three months of growth since May.
The unemployment rate remained unchanged at 6.4 percent last month, according to the agency.
The recent Labour Force Survey indicated a decrease in the number of public sector employees by 20,000, marking the third consecutive month of decline. Meanwhile, the private sector saw little change in job numbers.
August was a positive month for the manufacturing sector, which added 22,000 positions, while areas such as public administration, natural resources, and utilities reported job losses.
CIBC chief economist Andrew Grantham noted in a research update on Friday, “Manufacturing was the sole sector that recorded a statistically significant rise in employment during August.”
He added, “Today’s figures align with other indicators (exports, monthly GDP) suggesting the economy is decelerating again in Q3 after a robust second quarter, compounded by increased uncertainty surrounding U.S. trade.”
Regionally, Quebec faced the most significant impact, shedding 19,000 jobs, followed by Ontario with a loss of 18,000 positions.
Bank of Montreal chief economist Douglas Porter commented on Friday, “After a streak of surprisingly strong job data, it seemed Canada was due for a reality check. While this report is indeed soft, it is far from shocking.”
Statistics Canada also revealed that average hourly wage growth in August was the slowest it has been in nearly nine years, declining to two percent on an annual basis from 2.8 percent in July and 3.3 percent in June.
A Reuters survey of economists had forecast a gain of 15,000 jobs in August, while the unemployment rate was expected to remain at 6.4 percent, as per LSEG Data & Analytics.
The data released on Friday ends a series of monthly job increases, with the Canadian economy having added 75,000 jobs in July. From April to July, the total job increase amounted to 181,000.
This latest employment report arrives amid ongoing historic trade tensions between Canada and the United States, which are affecting numerous industries. Recently, U.S. President Donald Trump imposed a 50 percent tariff on around $28 billion worth of Canadian goods. Starting Tuesday, Canada will reciprocate with dollar-for-dollar tariffs on $27.6 billion of similar U.S. products.
In response, the federal government announced a $7.5-billion expansion of its economic relief program for affected workers and businesses. This new assistance is in addition to nearly $25 billion in tariff support provided over the past 18 months.
Statistics Canada noted on Friday that industries reliant on U.S. export demand continue to navigate “an uncertain economic environment.” The agency highlighted that the layoff rate in these sectors has been notably higher compared to others over the past 12 months leading up to August.
Scotiabank economist Mitch Villeneuve wrote in a research note published Thursday, “The proportion of Canadian exports directed towards the U.S. is gradually decreasing, averaging 76 percent in 2024, and 72 percent in 2025, with only 66 percent recorded in July 2026.”
He attributed this trend to stronger growth in exports to non-U.S. markets, particularly Europe.
On Wednesday, Bank of Canada Governor Tiff Macklem stated that although the recent U.S. tariffs are “very steep,” they apply to a “relatively narrow” range of products.
Job Gains in the U.S.
While the job market in Canada cooled down in August, the situation was quite different across the border.
On Friday, the U.S. Labor Department announced that American employers added 162,000 jobs in the previous month. Additionally, the agency revised its payroll figures for June and July, resulting in a net gain of 55,000 jobs.
The unemployment rate in the U.S. remained stable at 4.1 percent in August.
Trump took to social media on Friday to express his excitement over the latest statistics.
He wrote in a Truth Social post, “Great jobs number just announced, breaking all estimates (except mine!) by double and triple – And you haven’t seen anything yet!”
Trump indicated that this jobs data strengthens the argument for the Federal Reserve to decrease its key interest rate and warned that without a rate cut, he would halt trade with countries that have a trade deficit with the U.S.
In Canada, many economists anticipate that the central bank will maintain its policy rate at 2.25 percent for at least the remainder of the year.