Canadian economy bled 66,000 jobs in August as unemployment rate hit its highest since ‘pandemic days’

Canada’s Unemployment Rate Hits Highest Level Since 2016

In a concerning development, Canada’s unemployment rate reached nearly its highest point since 2016 as the economy shed 66,000 jobs in August, according to the latest data from Statistics Canada.

Unemployment Rate Rises to 7.1%

The unemployment rate rose 0.2 percentage points in August to 7.1 per cent, a level last seen in May 2016 if the COVID-19 years of 2020 and 2021 were excluded, the data agency said. This marks a significant increase from the 6.6 per cent rate in January.

Unexpected Job Losses

The figures were more dire than some economists had predicted, with a Reuters poll anticipating a gain of 10,000 jobs and the unemployment rate to rise to 7 per cent. Of the jobs lost, Statistics Canada reported that most — around 60,000 — were part-time positions, while there was little change in the number of full-time jobs.

Impact on Different Sectors

The job losses were widespread across various industries, with sectors like scientific and technical services, transportation and warehousing, and manufacturing experiencing significant declines. However, the construction industry saw an increase of 17,000 new roles.

Concerns for the Economy

BMO chief economist Douglas Porter expressed concerns about the weak jobs report, noting that it could prompt rate cuts by the Bank of Canada later in the month. While the impact of the trade war on tariff-exposed sectors was evident in the job losses, high inflation remains a factor that may influence the central bank’s decisions.

Looking Ahead

The Bank of Canada is set to announce its next interest rate decision on September 17, and all eyes will be on how they respond to the latest economic data. The continued rise in unemployment and job losses indicate ongoing challenges for Canada’s economy as it navigates through uncertain times.