Canadian unemployment jumps to 7.1% as tariffs weigh on economy

In August, Canada’s economy lost thousands of jobs, and its unemployment rate, excluding the pandemic years, reached its highest level in almost 1.6 million.

Statistics Canada released data on Friday, showing a rise in its unemployment rate of 0.2 percentage points in August to 7.1 percent, the highest level since May 2016 if COVID-19 years of 2020 and 2021 were excluded.

According to the report, the economy lost 65,500 jobs in August, primarily through part-time employment. The company claimed that this was also caused by some layoffs, with the layoff rate rising to 1 percent in August from the previous month’s figure of 0.9 percent.

Despite US tariffs on steel, aluminum, and cars, Canada’s economy has shown resilience in recent months, but Statistics Canada’s labor data revealed that import taxes are robbing up other industries.

Analysts polled by Reuters had predicted a 10% increase in net job growth and an increase in the unemployment rate from the previous month’s 6.9% increase.

The number of job losses in August was at their worst since January 2022.

After the employment data, which had been predicted for almost 72 percent, the odds of a rate cut on September 17 were almost 92 percent.

According to Doug Porter, chief economist at BMO Capital Markets, “I think it just reinforces the fact that the economy is struggling with the uncertainty on the trade front.”

Due to extensive US dollar declines, the Canadian dollar was trading strongly after the data.

Since the pandemic, the employment rate, or the percentage of people working overall, dropped to 60.5 percent in August, which is the lowest level ever. The participation rate, a crucial indicator that measures how many people are economically active, whether they are seeking jobs or actively looking for them, was 65.1 percent, which is the lowest level since the pandemic.

Canadian businesses have been hampered by ongoing uncertainty surrounding US trade policy, which has had a negative impact on job growth and job growth, along with significant job losses in the steel and automotive industries.

The transportation and manufacturing sectors have been the main beneficiaries of this phenomenon. According to StatsCan, manufacturing lost 19 200 jobs in August while transportation and warehousing lost 22,700.

However, the loss of 26, 100 jobs in the field of professional, scientific, and technical services, which make up almost 80% of the economy’s workforce, was surpassed by this. Net 67,200 jobs were lost in the services sector.

The manufacturing industry’s decline was described as “a pretty significant hit.”