Bulletin · Euro Weeks
OTTAWA — Economists weren’t ringing any alarm bells after fresh data showed the labour market broke its hot streak with a loss of 42,000 jobs in August. The unemployment rate held steady at 6.4% last month, Statistics Canada said Friday. August’s losses fell short of economists’ expectations for a gain of 15,000 positions. Heading into last month, employers had been expanding payrolls at a steady pace. The economy added 181,000 positions from April through July, including a gain of 75,000 jobs in July alone.
Most economists weighing in Friday weren’t concerned to see the labour market give back some of its recent gains. Andrew Hencic, senior economist at TD Bank, suggested in a note to clients Friday that one month of soft data should not define the labour market. Steadiness in the unemployment rate is more important than the headline job losses, he argued. “Although disappointing, given the noisy nature of the data a step backwards is not a major surprise after a string of hot reports,” Hencic said.
RBC senior economist Claire Fan said rising retirement rates from an aging population and a slowing pace of immigration are drivers of ‘dismal job growth.’ She, too, pointed to the jobless rate as a more reliable indicator of labour market health.
The public sector shed 20,000 positions in August, marking its third straight month of losses. The business, building, and other support services sector led declines, followed by public administration, natural resources, and utilities. The manufacturing industry, however, showed resilience with a gain of 22,000 jobs in August, despite U.S. tariffs. The U.S. imposed new 50% tariffs targeting about $28 billion worth of Canadian goods on Aug. 22, prompting Canada to retaliate starting Sept. 8.
Andrew Grantham, a senior economist at CIBC, noted that August’s job data may not fully capture the tariff shock due to surveys conducted mid-month. Firms might have increased hours worked to avoid the new duties, but this boost could unwind in September. The layoff rate in August was 0.8%, down from 1% a year ago and averaging 0.9% in the three years before COVID-19.
The annual increase in average hourly wages cooled to 2% in August, down from 2.8% in July and 3.3% in June. Grantham cautioned that wage data can be volatile but suggested the deceleration reflects earlier trends in job losses rather than current conditions.
The Bank of Canada held its benchmark interest rate steady at 2.25% earlier this week, signaling concerns about inflation risks tied to the ongoing Iran war. Governor Tiff Macklem noted the economy showed signs of a rebound amid escalating trade tensions, but warned of lingering inflation risks.
Grantham said the weak August jobs numbers reinforce expectations of slower growth in the third quarter, consistent with softer export and GDP data. He also noted that if global energy prices decline, it could ease inflation pressures, keeping the Bank of Canada on hold through mid-2027.
The report also highlighted job losses for youth aged 15 to 24, with 19,000 fewer jobs in August. Despite this, the jobless rate for students returning to school in the fall was 15.9%, two percentage points lower than in 2025.
Source: bnnbloomberg.ca
