Canada’s economy shed 42,000 jobs in August, following an increase of 75,000 jobs in July. Economists had expected employment to rise by 15,000 positions, according to a Reuters poll. The unemployment rate was unchanged at 6.4 per cent, its lowest level since 2024.
The loss included 20,000 public-sector positions. It was the third consecutive month of public-sector decline. The fall comes as the G7 economy faces tariffs imposed by the United States on Canadian goods and as a smaller share of Canadian exports goes to its largest market.
Employment rose by 181,000 jobs from April to July. Overall employment remained up 1.0% year-over-year. August, however, brought a marked shift in the monthly data, with losses across industries, regions and age groups.
Manufacturing added 22,000 jobs in August. Losses in other parts of the economy exceeded that gain. Business, building and other support services lost 20,000 jobs. Public administration lost 8,800 jobs, while natural resources employment fell by 7,700.
Young workers aged 15 to 24 lost 19,000 jobs. The student jobless rate for May–August 2026 was 15.9 per cent, down 2 percentage points from 2025.
Quebec lost 19,000 jobs in August, while Ontario lost 18,000. Those two provincial losses made up a large part of the national decline in employment.
The layoff rate was 0.8 per cent in August, compared with 1.0% a year ago. The employment decline therefore coincided with a lower layoff rate and an unchanged unemployment rate, rather than a broader increase in measured unemployment.
Wage growth also slowed. The annual increase in average hourly wages cooled to 2 per cent in August, its slowest pace since November 2017. The annual wage increase was last at 2 per cent in November 2017.
The figures come as the United States has applied 50 per cent tariffs on about $28 billion worth of Canadian goods. The share of Canadian exports bound for the U.S. was 66 per cent in July 2026, compared with an average of 76 per cent in 2024.
The employment figures do not identify the cause of the third consecutive monthly fall in public-sector employment. They also leave open whether August signals a broader slowdown. They show that the labour market lost momentum after gains from April to July, even as manufacturing added jobs during the month.
The Bank of Canada’s policy rate stands at 2.25 per cent and has been held at that level since December. Its next rate decision is due October 28. The effect of the federal government’s $7.5-billion relief program on employment recovery remains unknown, as does the timetable for resolving the U.S.–Canada tariff dispute.
Comments (0)