Canada's Labour Market Experiences Setback with 42,000 Job Losses in August

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Statistics Canada reports a significant drop in employment figures for August, halting a previous trend of job growth and raising concerns about the economic outlook.

OTTAWA — The Canadian labour market encountered a notable slowdown at the end of summer, as Statistics Canada disclosed a loss of 42,000 jobs in August. This unexpected decline maintained the unemployment rate at 6.4 percent, a figure that remained unchanged from the previous month. Economists had anticipated a gain of approximately 15,000 jobs, making the actual results especially disappointing. The job losses in August marked a stark contrast to the robust job creation seen from April through July, during which the economy added a total of 181,000 positions. The unemployment rate had previously decreased by half a percentage point over those three months, highlighting the sudden shift in momentum.
According to Statistics Canada, there was minimal change in both the private sector and self-employment figures for August. However, the public sector continued to struggle, shedding 20,000 jobs, marking its third consecutive month of losses. Among the various sectors, the business, building, and other support services were the most affected, followed by public administration, natural resources, and utilities. Interestingly, the manufacturing sector, which has faced significant challenges due to U.S. tariffs, showed unexpected resilience, adding 22,000 jobs in August.
The job figures for August only partially reflect the repercussions of a new wave of tariffs imposed by the United States, which affected approximately $28 billion worth of Canadian goods mid-month. Statistics Canada reported a layoff rate of 0.8 percent in August, which is a slight decrease from one percent a year ago and aligns with the average of 0.9 percent observed during the same months in the three years preceding the COVID-19 pandemic. For sectors dependent on export demand from the United States, the layoff rate was somewhat higher compared to other industries over the past year.
The annual increase in average hourly wages also showed signs of cooling, dropping to two percent in August, down from 2.8 percent in July and 3.3 percent in June. This marks the lowest annual wage growth since November 2017. Young workers aged 15 to 24 were particularly hard hit, facing a loss of 19,000 jobs in August. Despite this setback, Statistics Canada noted that the summer job market for youth was statistically more favorable than the previous year. From May to August this year, the average jobless rate for students returning to school stood at 15.9 percent, which is two percentage points lower than the same period in 2025.

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