Canadian economy bled 66,000 jobs in August as unemployment rate at its highest since 'pandemic days' | CBC News (2025)

Canada's unemployment rate reached nearly its highest point since 2016 as the economy shed66,000 jobs in August, according to new data from Statistics Canada.

The unemployment rate rose 0.2 percentage points in Augustto 7.1 per cent, a level last seen in May 2016 if the COVID-19 years of2020 and 2021 were excluded, the data agency said.

The unemployment rate,or the number of people unemployed out ofthe total labour force, has been rising consistently this year, up from a 6.6 per cent rate in January.

Of the 66,000 jobs lost, they were largely in part-timework. Reduced hiring and layoffs largely fuelled those numbers, Statistics Canada said, with the layoff rate rising to oneper cent in August, compared to 0.9 per cent at the same time last year.

This comes after the economy lost a total of 41,000 jobs last month.

The figures are more dire than some economists had predicted — a Reuters poll ahead of the release predicted a gain of 10,000 jobs and the unemployment rate to rise to 7 per cent.

Statistics Canada says most of the jobs lost — some 60,000 — were part-time ones, while there was little change in the number of full-time jobs.Most of the losses were also among workersbetween 25 to 54 years old, with little change in youth employment, according to StatsCan.

Pedro Antunes, Chief Economist at The Conference Board of Canada, says the report overall is bad news.

He points out that while youth unemployment also remained high in August, that age group had previously made up more of the drag on jobs. But now, the losses in August were among the core age group in the workforce.

"There's an awful lot of people here who have essentially lost their employment. It does generate uncertainty and a lot of angst in the labour market when these [kinds of] numbers come out," Antunes told CBC News.

A critical metric, called theparticipation rate, that shows how many people were economicallyactive— either in jobs or actively looking for them— was at 65.1 per cent,also at its lowest since the pandemic.

Tariff-exposed sectors hit the hardest

Employment fell across a number of industries, especiallysome of those most exposed to tariffs.

The transportation and warehousing sector lost 23,000 jobs and manufacturing bled 19,000.The scientific and technical services sector also dropped26,000 jobs.

Geographically, Canada's manufacturing hubs were also hit harder, with Windsor, Ont., reporting an unemployment rate of11.1 per cent and Oshawa, Ont., reporting a nineper cent rate.

Persistent uncertainty around U.S. trade policy has keptCanadian businesses on tenterhooks, leading to minimal hiringand investment, affecting the job market and economic growth.

Construction, on the other hand, made gains, adding 17,000 new roles.

Chief economistat BMO Capital Markets Douglas Portersaid the report was arguably the weakest since the pandemic days, with the "full effects"of the uncertainty brought by the trade war landing on the economy.

"In some ways it's almost textbook—exactly the sectors you would expect to be affected by the trade war were some of the weakest," Porter said, referencing big job losses in manufacturing and transportation.

He says the weak report could open the door to rate cuts by the Bank of Canada later this month, though with inflation remaining high, that factor hasn't given them the "all clear."

Still, Porter expects a rate cut when the central bank announces its next interest rate decision on Sept. 17.

The markets are betting on that, too.Money markets were putting odds of a rate cut atalmost 92 per centafter the jobs data, from 72 per cent earlier.

Across the border in the U.S., the labour market picture was also bleak. Unemployment rose in that country to 4.3 per cent— a four-year high. Their economy also added a mere22,000 jobs, which was a substantial miss from the75,000 figure that economists polled by Reuters had been forecasting.

Youth unemployment holds steady

There was little change to employment for people between the ages of 15 and 24 in August, with youth unemployment staying high at14.5per cent.

That's a decline by 0.1 percentage points from the month before. July saw the highest unemployment rate for that age group since September 2010 (again, outside of the pandemic years).

WATCH |How did the Gen Z job market get so bleak?:

The data paints a picture of a difficult summer for students looking for work. From May to August, the unemployment rate for students returning to schoolin the fall was17.9 —per cent —the highest since summer of 2009.

Gen Z students and recent grads have previously told CBC News about their struggles to find work, with some saying they'd applied to hundreds of jobs over a series of months with no success.

A report by Desjardins Thursdayarguedthe rise of gig work, artificial intelligence and rapid population growth were among the factorssouring job prospects for Canada's youngest workers.

Much of the current employment struggles for youthtraces back to the COVID-19 pandemic recovery, LJ Valencia, an authorof the Desjardins report, said. At a time when businesses were hungry for labour,Ottawa ramped up the inflow of foreign workers and loosened restrictions on international students to meet demand.

"Job opportunities are declining, because the economy can't keep up with this state of population growth," he said.

The rise of the gig economy —app-based and often precarious work— also often limits the participation of younger people, as some appsrequire users to be at least 18,effectively shutting out anyone younger.

Desjardinsalso cites a Stanford University study published last week that found while core-working-age U.S. employees have so far faced minimal job disruption from AI, youth are starting to see employment losses.