People line up at a Service Canada office in Montreal. Data show that the bulk of job losses in August were in part-time work.Paul Chiasson/The Canadian Press
The Canadian economy shed 66,000 jobs in August and the unemployment rate jumped to 7.1 per cent, the latest signs that the labour market is reeling from prohibitive U.S. tariffs.
Outside of the pandemic, the unemployment rate now resides at the highest level since 2016, Statistics Canada said Friday in a report, rising from 6.9 per cent in July. The numbers show that the bulk of job losses in August were in part-time work.
U.S. tariffs on Canadian goods have been squeezing the economy for several months, with gross domestic product tumbling at a 1.6-per-cent annualized rate in the second quarter. Combined with Friday’s weak labour numbers, the Bank of Canada could be pushed to cut its benchmark interest rate – currently at 2.75 per cent – at its next meeting in under two weeks.
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“The ugly employment numbers released today should be enough to push those who had been in the ‘no cut’ camp to reassess their outlooks,” said Royce Mendes, head of macro strategy at Desjardins Bank, in a Friday morning note. He predicted that the bank would cut interest rates by 25 basis points later this month, and ultimately reduce them to 2 per cent.
Ontario led employment declines last month, with 26,000 jobs lost, followed by British Columbia with 16,000 fewer jobs. The data also showed that employment decreases continued in the manufacturing, transportation and warehousing sector, but spread to the professional scientific sector which saw 26,000 job losses, or a 1.3 per cent decline.
The US job market also continued its summer stall, adding just 22,000 jobs in August. The unemployment rate rose by 0.1 percentage points to 4.3 per cent last month, the highest it has been since November, 2021.