Erik Hertzberg
(Bloomberg) – The Canadian economy has laid off jobs for the second consecutive month as unemployment jumps, increasing the likelihood that Canadian banks will lower interest rates this month.
Job jobs fell by 65,500 positions in August, driven by a decline in part-time jobs. Statistics Canada data showed on Friday that the unemployment rate rose to 7.1%. Even the most pessimistic projections outweigh the most pessimistic in Bloomberg’s survey of economists—the median forecast was to create 5,000 jobs.
Losses are driven by self-employed and services-related industries – transportation, professional services and education departments are all working. In manufacturing, employment has dropped by more than 19,000 jobs.
The yield on Canadian government bonds, which had a benchmark of two years, fell by about 6 basis points to 2.554%, while Loonie’s trade point was $1.38 per dollar as of 8:40 a.m. Traders raised the ante that the Bank of Canada will lower interest rates at its next meeting on September 17, at a price of about 80%.
Canada’s economy has lost an average of 6,600 jobs per month over the past six months, the weakest half year since the pandemic. Employment rate (the proportion of working-age population employed) fell by 0.2 percentage points to 60.5% in August.
In summary, the data confirms that Canada’s labor market continues to relax as economic and population growth slows and confronts the ongoing trade disputes in the United States.
Bank of Canada policymakers have kept key interest rates stable for three consecutive meetings, but the data will increase evidence that labour market slack is building and economic demand is too high. Core inflation stays around 3%, but officials have opened the door to additional currency easing if the economy worsens further and price pressures remain.
Last month, the private sector lost 7,500 jobs and the public sector saw a 15,000 jobs drop. The provinces in the region, Ontario, Alberta and British Columbia caused losses.
Total working hours in August increased by 0.1%, up 0.9% from a year ago.
The annual salary of permanent employees has increased to 3.6%, starting from 3.5%, while economists expect compensation to slow down to 3.4%.
– With the assistance of Mario Baker Ramirez and Derek Decloet.
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Last modified: September 5, 2025
