Canada Sheds 66,000 Jobs in August, Jobless Rate Hits 7.1%, TD Economics Says

10:37 AM EDT, 09/05/2025 (MT Newswires) -- At TD Economics, Leslie Preston, managing director and senior economist, said job losses in July and August have more than reversed June's outsized gain, leaving Canada down 39,000 jobs since January.

She said the unemployment rate has risen half a percentage point over the same period. "It could be worse though," she said, adding that slower labour force growth is keeping the unemployment rate from climbing higher despite weak labour demand.

Preston said August's report is consistent with the Bank of Canada's characterization of "an excess supply of labour" in July's Monetary Policy Report. However, she said it hasn't yet prompted the bank to cut rates beyond the pre-emptive moves earlier this year. She noted markets are now assigning odds to a September cut. TD continues to expect two more cuts in 2025, with the Sept. 16 inflation report likely to help cement the timing of the next move, she added.

Among details, Preston said Canada lost 66,000 jobs (-0.3% m/m) in August, following 41,000 lost in July. The declines were concentrated in part-time positions (-60,000), while full-time employment was little changed. The unemployment rate rose to a new cycle high of 7.1%.

She said the increase would have been larger were it not for 31,000 fewer workers in the labour force. The share of long-term unemployed (more than 27 weeks) was the highest since 1998 at 23.8%.

Preston said job losses were seen across several industries, led by professional, scientific and technical services (-26,000; -1.3%), transportation and warehousing (-23,000; -2.1%) and manufacturing (-19,000; -1.0%). Construction rebounded (+17,000; +1.1%) after July's decline (-22,000; -1.3%).

She also said wage growth slowed to 3.2% in August from 3.3% in July.

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