Canada’s job market faced a significant setback in August as Statistics Canada reported a loss of 66,000 jobs, pushing the unemployment rate to 7.1%. This marks the highest level since 2016, excluding the pandemic years of 2020 and 2021. The unemployment rate has been steadily increasing throughout the year, up from 6.6% in January.
Most of the lost jobs were in part-time positions, attributed to reduced hiring and increased layoffs, driving the layoff rate to 1% in August compared to 0.9% the previous year. The latest data reveals a more negative outlook than anticipated, with economists forecasting a gain of 10,000 jobs and a lower unemployment rate of 7%.
Statistics Canada highlighted that the majority of job losses, around 60,000, were in part-time roles, primarily affecting workers aged between 25 and 54. The report also noted minimal change in youth employment. Chief Economist Pedro Antunes expressed concerns over the significant employment losses, particularly among the core workforce age group.
Industries exposed to tariffs experienced the most substantial declines, with notable job losses in transportation, manufacturing, and scientific services sectors. Geographically, manufacturing hubs like Windsor and Oshawa in Ontario reported high unemployment rates. The ongoing uncertainty in U.S. trade policies has impacted Canadian businesses, resulting in limited hiring and investment.
On a positive note, the construction sector saw an increase of 17,000 jobs in August. BMO Capital Markets’ Chief Economist Douglas Porter highlighted the impact of trade war uncertainty on the economy, suggesting that it could lead to potential rate cuts by the Bank of Canada in the near future.
In the U.S., the labor market also faced challenges, with unemployment rising to 4.3%, the highest in four years. The economy added a mere 22,000 jobs, falling short of the 75,000 figure predicted by economists. Youth unemployment in Canada remained high at 14.5%, with minimal changes in employment for individuals aged 15 to 24.
The report reflects a tough summer for students seeking employment, with the highest unemployment rate for students returning to school since 2009. Factors such as gig work, artificial intelligence, and rapid population growth were cited as contributing to the challenging job market for young workers. The rise of the gig economy and AI technology are also affecting the prospects of younger employees.
The current employment struggles for youth are linked to the pandemic recovery, as per LJ Valencia of Desjardins, highlighting the mismatch between job opportunities and population growth. The rise of gig work and limitations on youth participation in certain sectors, alongside the impact of AI on employment, are key concerns for the future job market.
