Canada’s job market faced a significant setback in August, with the country’s unemployment rate soaring to 7.1 per cent, marking a level not seen since May 2016 when excluding the pandemic years. Statistics Canada reported a loss of 66,000 jobs, predominantly in part-time roles due to reduced hiring and increased layoffs. This continuous rise in unemployment, now at 7.1 per cent, has been a trend throughout the year, starting from 6.6 per cent in January.
Notably, most of the lost jobs, around 60,000, were part-time positions, while full-time employment remained relatively stable. The workforce aged between 25 to 54 years experienced the majority of job losses, with little impact on youth employment. The overall employment scenario was described as dismal by Pedro Antunes, Chief Economist at The Conference Board of Canada, highlighting the increased uncertainty and anxiety in the labor market.
Industries heavily impacted by tariffs suffered the most significant job losses, with sectors like transportation, warehousing, manufacturing, and scientific services shedding thousands of jobs. Geographically, manufacturing hubs such as Windsor and Oshawa in Ontario reported high unemployment rates. The ongoing uncertainty in U.S. trade policies has hampered Canadian businesses, leading to subdued hiring and investment, further affecting job creation and economic growth.
Despite some sectors like construction showing gains, the overall employment report was deemed one of the weakest since the pandemic, with concerns about the trade war’s impact. Economists anticipate potential rate cuts by the Bank of Canada to address the economic challenges, although high inflation remains a factor for consideration. Market expectations lean towards a rate cut in the upcoming interest rate decision.
In the U.S., the labor market also faced challenges, with an increase in unemployment to 4.3 per cent and only 22,000 new jobs added, falling significantly short of the forecasted figures. The youth unemployment rate remained high at 14.5 per cent, with summer employment for students at its highest level since 2009.
The difficulties faced by young job seekers have been attributed to various factors, including the rise of gig work, artificial intelligence, and rapid population growth. The impact of the pandemic recovery and evolving job market dynamics have posed significant hurdles for Canada’s youth workforce, emphasizing the need for policy adjustments to address these challenges effectively.
