Canada's Jobless Rate Holds at 6.4% Despite August Losses

Nearly half the job losses were in Government, not private sector!

Canada's Unemployment Rate Held at 6.4% in August as Manufacturing Added Jobs Despite Tariffs

Canada’s unemployment rate held at 6.4 percent in August, even as the economy shed 42,000 jobs, according to Statistics Canada’s Labor Force Survey released Friday. The headline number looks grim. The details underneath it tell a more complicated story about who’s actually losing ground.

Almost all of the damage landed on government payrolls. Statistics Canada said the public sector shed 20,000 positions in August, its third straight month of losses, while the private sector and self-employment saw little change. For the large majority of working Canadians who don’t draw a government paycheque, August was largely a non-event.

The layoff data backs that up. StatCan’s layoff rate, the share of people unemployed because they were let go, was 0.8 percent in August. That’s down from one per cent a year earlier and below the pre-pandemic three-year average of 0.9 percent. Companies aren’t running layoffs. They appear to be freezing hiring instead, a distinction that matters for anyone trying to read the actual health of the job market.

Manufacturing, the sector most exposed to Washington’s tariffs, added 22,000 jobs in August, BNN Bloomberg reported, a surprise gain StatCan itself flagged as a pocket of strength in a sector that has otherwise absorbed the brunt of the trade war.

The numbers follow four unusually strong months. Canada added 181,000 jobs between April and July, and the jobless rate fell by half a percentage point over that stretch. August, by that measure, reads less like a collapse and more like a pause after a genuine hot streak.

There’s a real caveat, and Statistics Canada said as much: the 50 percent U.S. tariffs on roughly $28 billion of Canadian goods only took effect partway through August, meaning this report captures only a partial hit. September’s survey will be the first to reflect a full month under the new tariff regime and will show whether August’s resilience holds.

Wage growth cooled sharply, rising 2 percent year over year in August, down from 2.8 percent in July, the slowest pace since November 2017. That’s the clearest sign in the report that momentum is fading, even if jobs themselves haven’t started disappearing outside of Ottawa’s own payroll.

For now, the Canadian economy absorbed a jobs shock from Washington without the layoffs economists feared. What happens once the full tariff bill comes due will say more about whether that resilience is real or borrowed time.