Canada’s labour market lost ground at the end of the summer, with employment falling by 42,000 jobs in August, according to Statistics Canada.
Despite the decline in employment, the unemployment rate remained unchanged at 6.4 per cent last month.
The result came in well below economists’ expectations, who had forecast a gain of 15,000 jobs. It also marked a sharp reversal from the labour market’s strong performance between April and July, when 181,000 positions were added and the unemployment rate fell by half a percentage point over three months.
Statistics Canada reported little change in private-sector employment and self-employment in August. The public sector, however, continued to weaken, shedding 20,000 positions and recording its third consecutive monthly decline.
Among industries, business, building and other support services recorded the largest employment losses. Public administration, natural resources and utilities also posted declines.
Manufacturing offered a notable exception. Despite being among the sectors most exposed to U.S. tariffs, the industry added 22,000 jobs in August, providing an unexpected source of strength in an otherwise weaker month.
The August employment figures only partially reflect the impact of the latest round of U.S. trade measures. A new wave of 50 per cent tariffs on approximately $28 billion worth of Canadian goods came into effect in the middle of the month, meaning their full effects are unlikely to be reflected in the latest data.
Statistics Canada also reported that the layoff rate — the proportion of unemployed people who had lost their jobs through a layoff between July and August — stood at 0.8 per cent in August. That compares with 1 per cent a year earlier and an average of 0.9 per cent during the same period in the three years preceding the COVID-19 pandemic.
Industries that depend heavily on export demand from the United States experienced a marginally higher layoff rate over the past 12 months than other sectors, according to the agency.
Wage growth also continued to cool. Average hourly wages increased by 2 per cent year over year in August, down from 2.8 per cent in July and 3.3 per cent in June. Statistics Canada noted that the last time annual wage growth was this low was in November 2017.
Young workers were particularly affected by August’s employment decline. People aged 15 to 24 accounted for 19,000 of the jobs lost during the month.
Even with that difficult finish to the summer, Statistics Canada said the youth labour market performed statistically better this year than it did in 2025.
From May through August, the average unemployment rate among students returning to school in the fall was 15.9 per cent. That was two percentage points lower than during the same period in 2025.
