Canadian Job Losses
Canada Loses 42,000 Jobs in August Amid Trade Uncertainty and Slowing Growth
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Key Points
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Montreal’s 21,000-job decline coincided with a shrinking regional population and fewer people working or actively seeking work; despite the monthly drop, employment remained higher than a year earlier and the regional unemployment rate edged down to 6.5%.
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Canada had added 181,000 jobs between April and July before August’s reversal, highlighting how sharply the latest report broke with the preceding run of gains.
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TD Bank senior economist Andrew Hencic said the disappointing result was not unexpected after several unusually strong reports, calling the August setback relatively unsurprising given the volatility of the data.
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The Canadian dollar’s decline was amplified by a stronger-than-expected U.S. employment report: U.S. nonfarm payrolls rose by 162,000 in August versus expectations for a 56,000 increase, sending USD/CAD up about 0.39% to roughly 1.3850.
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CIBC senior economist Andrew Grantham said the employment figures reinforced expectations that Canadian economic growth will slow in the third quarter.
Canada lost 42,000 jobs in August, a sharp reversal after gaining 75,000 positions in July and falling far short of the expected 15,000-job increase Statistics Canada. The unemployment rate stayed flat at 6.4% even as fewer people actively sought work, while annual wage growth slowed to 2%—its weakest pace since 2017. The setback comes amid U.S. tariffs and mounting trade uncertainty that have begun to weigh on hiring decisions.
Job losses were concentrated in Ontario and Quebec, with Montreal alone shedding 21,000 positions Statistics Canada. Manufacturing was the bright spot, adding 22,000 jobs, but public-sector employment fell for a third straight month. Economists called the report a manageable correction after months of outsized gains, though stronger U.S. payroll growth pushed the Canadian dollar lower against the U.S. dollar.
A Strong Streak Ends With Sharp August Drop
Canada had added 181,000 jobs between April and July, building momentum that suddenly reversed Statistics Canada. The August decline wiped away July's 75,000-job gain in a single month. Full-time employment accounted for most of the losses. Youth employment fell by 19,000 positions, even as students had landed summer jobs more readily than in 2025.
TD Bank senior economist Andrew Hencic said the setback was not surprising after unusually strong reports. BMO Capital Markets called it "a soft report, but far from a shock." Both economists framed August as normal statistical volatility rather than a warning sign. However, the timing raised concerns about trade uncertainty's real impact on business confidence and hiring plans.
Montreal and Ontario Bear Heaviest Regional Losses
The Montreal region lost 21,000 jobs in August Statistics Canada, coinciding with a shrinking regional population and fewer job seekers. Despite the monthly decline, employment remained higher than a year earlier. The unemployment rate in Montreal edged down to 6.5%. Ontario recorded an overall net loss of 18,000 positions, with unemployment rising to 6.9%.
These two provinces account for most of Canada's manufacturing and industrial capacity, sectors most exposed to U.S. tariffs. Losses spread across public administration, business services, natural resources, and utilities. Public-sector employment fell for a third consecutive month, signaling budget pressure or reduced hiring appetite among government agencies.
Wage Growth Slows as Trade Clouds Darken
Annual wage growth dropped to 2.0%—the slowest pace since 2017—suggesting weakening demand and reduced bargaining power Statistics Canada. Labour-force participation also edged lower, meaning some workers left the job market rather than remaining unemployed. These trends reduce pressure for future interest-rate increases, even as CIBC Capital Markets warned that Q3 economic growth would likely slow further.
The Canadian dollar fell roughly 0.39% to 1.3850 USD/CAD as U.S. nonfarm payrolls rose 162,000—far above the expected 56,000 allwork.space. The stark contrast between Canadian job losses and U.S. strength widened the growth gap between the two countries, pressuring the loonie. The Bank of Canada, which holds its policy rate at 2.25%, faces little incentive to raise borrowing costs with wage growth slowing and employment momentum broken.
Manufacturing Adds Jobs While Broader Economy Weakens
Manufacturing was the lone bright spot, gaining 22,000 jobs despite economy-wide weakness Statistics Canada. This uneven impact suggests tariff damage has not yet spread across all sectors. Instead, trade friction appears to be affecting specific industries, investment decisions, and future hiring plans selectively. Employers may still be cautious rather than laying off workers en masse.
Public administration shed 8,800 positions, while natural resources and utilities lost 7,700 and an unspecified number respectively. The concentration of losses outside manufacturing hints that tariff uncertainty may be hitting service sectors and government budgets harder than goods production. As allwork.space reported, the 50% U.S. tariffs cover a relatively small share of Canada's total exports, but the psychological impact on hiring is already visible.
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