Key points
- 65,500 jobs lost in August
- Services sector suffers biggest losses
- US tariffs impact manufacturing, trade
ISLAMABAD: Canada’s unemployment rate climbed to 7.1 per cent in August — the highest in nine years, excluding the pandemic period — as the economy shed thousands of jobs, according to new data released by Statistics Canada on Friday.
https://x.com/brianlilley/status/1963945895311089808?t=JBc3VSbBkfN3F9EevLxPFA&s=19
Nearly 1.6 million Canadians were unemployed last month, with the country losing 65,500 jobs, mostly part-time roles. The agency attributed the drop not just to slower hiring, but also to an increase in layoffs, as the layoff rate rose to 1 per cent from 0.9 per cent a year earlier, according to Al Jazeera.
The last time Canada recorded an unemployment rate this high, discounting the COVID-19 years of 2020 and 2021, was in May 2016.
Canada’s unemployment rate hits 7.1%.
It was high before Trump and tariffs, now it is worse.
Also, it used to be you couldn’t get a Temporary Foreign Worker after unemployment hit 6%. Trudeau got rid of that and now Carney is defending the program. pic.twitter.com/pXjMP1Hjf9— Brian Lilley (@brianlilley) September 5, 2025
Analysts had anticipated modest gains of 10,000 jobs and only a slight rise in the jobless rate to 7 per cent, but the figures surprised markets. The number of positions lost marked the steepest decline since January 2022.
Struggling economy
In response to the disappointing labour data, money markets shifted expectations, pricing in a 92 per cent chance of a rate cut at the Bank of Canada’s meeting on 17 September — up from 72 per cent before the report.
“I think it simply reinforces the point that the economy is struggling with the uncertainty on the trade front,” said Doug Porter, chief economist at BMO Capital Markets, who now expects the central bank to cut rates.
Despite the job losses, the Canadian dollar remained firm, buoyed by broader weakness in the US dollar.
𝟳.𝟭% 𝗨𝗻𝗲𝗺𝗽𝗹𝗼𝘆𝗺𝗲𝗻𝘁 𝗶𝗻 𝗔𝘂𝗴𝘂𝘀𝘁 — and @ESDC_GC thinks approving more LMIAs makes sense?
𝟲𝟲𝟬𝟬𝟬 𝗷𝗼𝗯𝘀 𝗹𝗼𝘀𝘁 𝗶𝗻 𝗮 𝘀𝗶𝗻𝗴𝗹𝗲 𝗺𝗼𝗻𝘁𝗵. 😡
Who still thinks Canada needs Temporary Foreign Workers Program? pic.twitter.com/ifzrjvxtST
— Kanwar Sierah, RCIC (@KanwarSierah) September 5, 2025
The employment rate — the proportion of people employed relative to the total population — dropped to 60.5 per cent, its lowest since the pandemic. Meanwhile, the participation rate, which reflects the percentage of people either working or actively looking for work, fell to 65.1 per cent, also a post-pandemic low.
Heavy hit
US tariffs on Canadian steel, aluminum, and vehicles have begun to affect broader sectors of the economy. Businesses have shown caution, leading to reduced hiring and investment. The transportation and manufacturing sectors were hit particularly hard, with transportation and warehousing losing 22,700 jobs and manufacturing shedding 19,200.
Canadian jobs number was a complete fiasco.
-65,000 vs expectations of +4,900.
Unemployment rate up to 7%.
They are headed towards something really ugly up north. https://t.co/6URRXjxXC6
— QE Infinity (@StealthQE4) September 5, 2025
The largest losses, however, came from the professional, scientific, and technical services sector, which lost 26,100 jobs. This category is part of the services-producing industry, which accounts for nearly 80 per cent of total employment. In total, the services sector saw a net loss of 67,200 jobs in August.
Porter described the manufacturing job losses as “a pretty heavy hit”.
Job growth was limited, with construction — part of the goods-producing sector — gaining 17,100 positions.
