Canada jobs fall sharply in August as labour market loses summer momentum

In August, Canada's labour market experienced a sharp decline, with employment falling by 41,700 jobs, according to Statistics Canada. This marked a significant reversal from the previous month, when employers added 75,100 positions. The decline was more severe than economists had anticipated, with only a modest gain of around 15,000 jobs expected.

The loss of momentum in the labour market was attributed to a slowdown in hiring that began earlier in the summer, as well as growing uncertainty due to new U.S. tariffs announced later in August. The impact of these tariffs, particularly on sectors like wood products, was expected to weigh on hiring decisions and business activity.

The weakness in the labour market was most pronounced among workers aged 25 to 54, as well as in youth employment, which softened as the summer hiring season came to an end. Despite these challenges, student labour market conditions were relatively better than in the previous year, with lower summer unemployment for returning students compared to 2025.

Anupriya Gangopadhyay, an economist at the Business Data Lab and Canadian Chamber of Commerce, noted that September typically sees a quieter labour market as youth workers return to school and the summer hiring season winds down. The data reflects one of the final snapshots of Canada's labour market before the full effects of the U.S. President's new 50% tariffs are anticipated to become more visible.

While these duties affect only a small portion of Canada's exports, they could disproportionately impact industries such as wood products, potentially contributing to further job losses and business slowdowns. The Canadian dollar weakened following the release of the employment figures, falling 0.51% to C$1.3860 per U.S. dollar. The yield on Canada's two-year government bond also rose by 1.3 basis points to 2.469%.