Persistent uncertainty about US trade policy keeps Canadian businesses on Tenterhook and prevents employment.
Released on September 5th, 2025
Around 1.6 million people lost their jobs in Canada in August as the economy lost thousands of jobs and their unemployment rate reached a nine-year peak except during the pandemic era.
Data released by Statistics Canada on Friday showed that unemployment rate rose 0.2 percentage points to 7.1% in August, at the last level seen in May 2016 when Covid-19 in 2020 and 2021 was excluded.
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The economy said it took away 65,500 jobs, mainly part-time jobs, adding that this not only declines in employment, but the layoff rate also rose to 1% in August, rising layoff rates compared to 0.9% observed 12 months ago.
While the Canadian economy has shown resilience in the face of US tariffs on steel, aluminum and automobiles over the past few months, Statistics Canada labor data showed import taxes ripple over other sectors.
Analysts voted by Reuters had forecast net profits of up to 7% in August and net profits of 10,000 people, from 6.9% the previous month.
Unemployment numbers in August reached its worst level since January 2022.
Money Market was betting on September 17th at almost 92% of employment data, cutting odds to 92%, before 72%.
“I think it’s just strengthening the point that the economy is struggling with uncertainty on the trade front,” said Doug Porter, chief economist at BMO Capital Markets.
The Canadian dollar was trading strongly after the data as the US dollar fell sharply.
Employment rates, or the number of people employed by the total population, have fallen to a low level of 60.5% since the August pandemic. An important indicator called participation rate was 65.1% of people working and actively looking for people, the lowest since the pandemic 65.1%.
The sustained uncertainty about US trade policy keeps Canadian businesses on tenterhooks, leading to minimal employment and investment, affecting job markets and economic growth, and there is a significant unemployment in the automotive manufacturing and steel sectors.
The brunt of this phenomenon is involved in transportation and manufacturing. Statscan said transportation and warehouses lost 22,700 jobs, while manufacturing lost 19,200 in August.
But this excels at losing 26,100 jobs in professional, scientific and technical services, a category that is part of the sector that produces services, which accounts for almost 80% of all jobs in the economy. The services sector has abolished 67,200 jobs.
Porter called the manufacturing sector’s losses “a rather heavy hit.”
The benefits of the employment of around 17,100 people were part of the sector that produced goods, which were seen primarily during construction and were part of the tariff conflict.
