Date: September 5, 2025
Overview
Canada’s labor market took a significant hit in August, with Statistics Canada reporting a net loss of approximately 65,500 to 66,000 jobs, pushing the unemployment rate to 7.1%—the highest level since May 2016 outside the pandemic era (Reuters, Retail Insider).
Key Stats At a Glance
Industry Breakdown
Hardest hit sectors:
Professional, scientific & technical services (~−26,100 jobs)
Transportation & warehousing (~−22,700)
Manufacturing (~−19,200) (Reuters)
Sole bright spot:
Construction added approximately 17,100 jobs (Reuters)
Overall, the broader services sector, which employs around 80% of Canadians, lost a substantial 67,200 jobs (Reuters)
What’s Behind This Slump?
Persisting U.S. trade tensions: Ongoing tariffs on Canadian steel, aluminum, and autos are undermining business confidence and hiring (Reuters).
Part-time work bears the brunt: A sharp drop in part-time jobs—about 60,000—drove most of the decline; full-time positions were relatively stable (Retail Insider, TD Economics).
Soft labor metrics: A shrinking labor force has somewhat masked how bad the situation could've been—less competition held back deeper rises in unemployment (TD Economics).
Market Reaction & Monetary Outlook
Market shifts: Odds of a Bank of Canada rate cut in the September 17 meeting spiked to over 90% (Reuters).
Currency & bonds: The loonie weakened against other G10 currencies (down ~0.1%) and Canadian bond yields dipped to their lowest levels since June (Reuters).
Analyst views: Economists at TD and BMO labeled the report “very poor” and “broad‑based softness,” signaling that further policy easing is likely (Reuters, Investing.com, TD Economics).
What Comes Next?
Bank of Canada’s policy crossroads: With labor market slack growing and inflation pressures still present, the central bank faces the classic dilemma—cut rates soon or risk deeper economic damage. All eyes are on the September 17 decision.
Signal for business sentiment: This job report—and any potential rate cut—will likely influence investments, hiring plans, and consumer confidence heading into Q4.
Further Reading
Reuters: Canada’s unemployment jumps to 7.1% in August as tariffs curb business confidence (Reuters)
Reuters: Canadian dollar underperforms as job data fuels BoC rate‑cut bets (Reuters)
Retail Insider: Deep‑dive stats & commentary on Canada’s August job losses (Retail Insider)
TD Economics: Canada’s employment data and implications for rate cuts (TD Economics)
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