Canada’s Job Market Faces Sharp Downturn

The latest Canada jobs report reveals a harsh reality: the economy shed 66,000 jobs in August, pushing the unemployment rate to 7.1%, the highest since the pandemic era. Statistics Canada confirmed that most of the losses came from part-time work, intensifying concerns over the country’s economic stability.

Unemployment Climbs to 7.1%

The unemployment rate edged up by 0.2 percentage points, continuing a year-long rise from 6.6% in January. The loss of 66,000 jobs follows July’s decline of 41,000, marking two consecutive months of setbacks. Economists had expected modest growth, making these numbers a sharper blow than anticipated.

Who Was Hit the Hardest

Statistics Canada reported that 60,000 of the jobs lost were part-time, striking hardest at workers aged 25 to 54. Youth employment remained high but largely unchanged, while the participation rate fell to 65.1%, its lowest since the pandemic.

Pedro Antunes, Chief Economist at the Conference Board of Canada, called the report “bad news,” noting that core working-age Canadians now bear the brunt of job losses.

Industries and Regions Feeling the Pain

Job losses were widespread, but transportation and warehousing shed 23,000 positions, manufacturing lost 19,000, and scientific services dropped 26,000. Ontario’s manufacturing hubs took a severe hit, with Windsor’s unemployment rate climbing to 11.1% and Oshawa’s to 9%.

Meanwhile, construction offered a rare bright spot, adding 17,000 new roles.

Trade Tensions and Inflation Add Pressure

Douglas Porter, Chief Economist at BMO, said the losses mirror sectors most vulnerable to tariff uncertainty and the ongoing U.S. trade dispute. He suggested the weak report increases chances of a Bank of Canada rate cut on September 17, though high inflation remains a limiting factor. Markets now place the odds of a cut at 92%.

Youth Employment Struggles Persist

Youth unemployment stayed high at 14.5%, reflecting long-term challenges. Students seeking summer work faced an even steeper rate of 17.9%, the highest since 2009. Many young Canadians report applying to hundreds of jobs without success.

A Desjardins report links poor prospects for youth to AI disruption, the rise of gig work, and rapid population growth. Author LJ Valencia explained that while businesses initially demanded labour post-pandemic, immigration and student inflows have since outpaced job creation.

A Nation at a Crossroads

The August Canada jobs report paints a picture of a strained economy and a workforce facing mounting challenges. With layoffs rising, participation falling, and young workers struggling to find their footing, questions remain about whether monetary policy can stabilize the market.

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