RBC on Canadian Jobs Figures in August

01:59 PM EDT, 09/05/2025 (MT Newswires) -- A 66,000 employment decline Canada in August followed a 41,000 contraction in July, adding to evidence that the trade war is taking its toll on Canadian labour markets, writes RBC. The worsening trend in the summer also mirrors conditions in the U.S., where job growth has largely ground to a halt since May and the unemployment rate has also edged higher.

The Canadian unemployment rate rose from 6.9% to 7.1% in August, the highest in nearly a decade (outside of the pandemic). Most of the job losses were part-time, actual hours worked edged up 0.1%, and weakness remained relatively concentrated in the trade exposed sectors of the economy. Employment in manufacturing, transport and warehousing together shrank by 42k in August.

The negative jobs report today lifts the odds that the Bank of Canada could see fit to cut interest rates further. The next CPI print in Canada, set to release on September 16, the day before the next Bank of Canada meeting, will bear an unusual amount of weight as a deciding factor, RBC notes.

Conditions in trade-exposed sectors will likely deteriorate but RBC does not expect that will spread and cause a sharp, broad-based contraction. This is due to a relatively low average tariff rate on Canada among major U.S. trade partners thanks to CUSMA exemptions and healthy domestic consumer spending trends.

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