Canada lost 42,000 jobs in August, ending a hot streak in the labour market that had added 181,000 positions over the previous four months, Statistics Canada reported Friday. The unemployment rate held steady at 6.4 per cent despite the decline.
The job loss surprised economists, who had forecast a gain of 15,000 positions for the month. A Reuters poll of analysts had predicted employers would add to payrolls as the summer hiring season wound down.
Full-time employment bore the brunt of August’s decline, falling by 35,900 positions, while part-time jobs dropped by 5,800, according to Statistics Canada. The public sector shed 20,000 jobs, marking its third consecutive month of losses.
The manufacturing sector emerged as a bright spot, adding 22,000 jobs in August despite broader headwinds. However, business support services, public administration, natural resources, and utilities all recorded declines. By region, Quebec was hardest hit with 19,000 job losses, followed by Ontario with 18,000.
Wage growth also decelerated sharply. Average hourly wage increases slowed to 2.0 per cent on an annualized basis in August, down from 2.8 per cent in July and 3.3 per cent in June—the weakest pace in nearly nine years, according to Statistics Canada.
The labour market’s sudden weakness reflects mounting trade uncertainty. The United States had imposed 50 per cent tariffs on approximately $28 billion worth of Canadian goods mid-August, with Canada retaliating with dollar-for-dollar tariffs on comparable U.S. goods. Statistics Canada noted that industries dependent on U.S. export demand continued to face an uncertain economic context, with layoff rates higher in those sectors over the preceding 12 months.
CIBC chief economist Andrew Grantham noted that the August report aligned with other evidence of economic slowdown. “Today’s print seems to tally with other evidence (exports, monthly GDP) that the economy is slowing again in Q3 following a strong second quarter and, with heightened uncertainty regarding U.S trade,” Grantham wrote in a research note.
Bank of Montreal chief economist Douglas Porter took a measured view of the data. “After a run of surprisingly hearty job results, it seemed Canada was almost due for a reality check. So while this is no doubt a soft report, it’s far from a shock,” he wrote Friday.
Young workers aged 15 to 24 faced 19,000 job losses in August. Despite the weak summer finish, Statistics Canada reported that the student jobless rate from May to August averaged 15.9 per cent—two percentage points lower than the same period in 2025.
The August figures capture only a partial impact from the tariff wave, as the new U.S. duties took effect mid-month. The federal government has rolled out a $7.5 billion expanded economic relief program for affected workers and businesses, adding to nearly $25 billion in tariff support implemented over the previous 18 months. Many economists expect Canada’s central bank to hold its policy rate steady at 2.25 per cent through the remainder of 2026.
Sources
- Statistics Canada — Labour Force Survey for August 2026, employment decline of 42,000, unemployment rate at 6.4%, wage growth data, sectoral breakdowns
- CBC News — Confirmed 42,000 job loss, economist forecasts, prior four-month gains of 181,000, wage growth slowdown, regional losses, CIBC and BMO economist commentary, tariff context
- Global News — August job losses, unemployment rate, public sector decline for third month, manufacturing gains, full-time versus part-time breakdown, youth job losses, wage growth slowdown
- Reuters — Economist poll predicting 15,000 job gain for August
