Canada shed 65,500 positions in August, marking a second straight monthly decline, according to Statistics Canada’s labour force survey released this morning.
The employment rate fell to 60.5%, while the unemployment rate rose 0.2 points to 7.1%—its highest level since May 2016, excluding 2020 and 2021, StatCan reported.
Both the job losses and the rise in unemployment came in higher than economists had expected.
The decline was driven mostly by part-time positions, which fell by 60,000, while full-time employment was little changed.
Employment fell across several industries, led by professional, scientific and technical services (-26,100), transportation and warehousing (-22,700) and manufacturing (-19,200). Construction was a bright spot, adding 17,000 jobs, or 1.1%.
Total hours worked were essentially flat in August (+0.1%), though up 0.9% from a year earlier. Average hourly wages rose 3.2% year-over-year to $36.31.
BMO’s Douglas Porter didn’t mince words, calling the release “arguably the weakest jobs report since the pandemic days.” Still, he added a small qualifier.
“The details of the release were not quite as dire as the headline results, but still mostly weak,” he added.
U.S. job figures, also released this morning, pointed to softness as well. Non-farm payrolls rose by 22,000—below expectations—while gains from the prior two months were revised down by a combined 21,000.
BoC likely to weigh inflation more heavily than weak jobs in next rate decision
Though August’s job numbers came in weaker than expected, economists stress the Bank of Canada will ultimately base its decision on the inflation report due later this month.
TD’s Leslie Preston noted the soft data aligns with the BoC’s recent description of an “excess supply of labour” in its Monetary Policy Report. She added that while such conditions haven’t yet prompted cuts, market expectations are beginning to shift.
“Markets are now putting odds on the next cut coming in September,” she noted. “We have long expected two more cuts this year, with the inflation report on September 16 likely to help cement the timing of the next cut.”
While economists agree today’s jobs data won’t outweigh the upcoming inflation report, Scotiabank’s Derek Holt noted the Bank of Canada will still take these numbers into account.
“Does it matter to the BoC? You bet it does,” he wrote. “A meaningful decline in employment would be taken dovishly by the BoC.”
CIBC’s Andrew Grantham noted the weakening labour market isn’t limited to tariff-sensitive sectors, suggesting the BoC has a role in supporting demand and hiring. CIBC expects rate cuts to be part of that response.
“We continue to forecast a September cut and a further reduction in Q4, which should help the labour market stabilise towards year-end and bring a gradual recovery in 2026, assuming no further dramatic changes in U.S. trade policy,” he wrote.
Canadian bond yields fell following the release. The 5-year yield dropped to 2.75% from 2.84%, while the 10-year slipped to 3.23% from 3.31%.
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Last modified: September 5, 2025
