Canadian economy loses 42,000 jobs as US tariffs cloud economic outlook

Canada's economy lost 42,000 jobs in August, ending months of strong employment gains as the country's labour market showed signs of slowing.

Statistics Canada said on Friday that the unemployment rate remained unchanged at 6.4 percent while economists had expected the economy to add about 15,000 jobs.

The decline follows a strong run between April and July, when Canada added 181,000 positions and the unemployment rate fell by half a percentage point.

The public sector lost 20,000 jobs in August, marking its third consecutive monthly decline. Employment also fell in business, building and other support services, public administration, natural resources and utilities.

Manufacturing, however, added 22,000 jobs despite pressure from US tariffs.

“Although disappointing, given the noisy nature of the data a step backwards is not a major surprise after a string of hot reports,” TD Bank senior economist Andrew Hencic said in a note to CTV.

Young Canadians aged 15 to 24 lost 19,000 jobs during the month.

Average hourly wage growth also slowed to two percent year-on-year, its weakest annual increase since November 2017.

CIBC senior economist Andrew Grantham said to CTV the figures reinforce expectations that Canadian economic growth will slow during the third quarter.