Canada's unemployment rate rises to six-month high as full-time jobs drop

* Canada's unemployment rate climbs to 6.9% in April

* Economy lost a net 17,700 jobs last month, StatsCan says

* Average hourly wages of permanent employees grew 4.8%

* Participation rate at 65% in April as population ages

By Promit Mukherjee

OTTAWA, May 8 (Reuters) - Canada's unemployment rate rose to a six-month high in April to 6.9% as the economy lost a net 17,700 jobs, Statistics Canada data showed on Friday, indicating continued weakness in a labor market that has struggled in the face of U.S. tariffs and trade uncertainty. Analysts polled by Reuters had predicted a net gain of 15,000 jobs and an unemployment rate of 6.7%, almost mirroring the data from March, when employment rose by 14,100 and the jobless rate was unchanged. The Bank of Canada said in its Monetary Policy Report last month that indicators such as the employment rate, hours worked and job vacancies suggest there is slack, or underutilized capacity, in the labor market, although layoffs remain modest. The looming uncertainty around the future of the North American free trade deal and the knock-on impacts of the higher prices from the Iran war has added to the negative impact of U.S. tariffs on the economy for more than a year. The job losses last month were completely concentrated in full-time jobs, which lost a net 46,700 positions, offset only by a gain of 29,000 in the part-time sector. The net overall decline in employment over the first four months of 2026 was concentrated in full-time work, which fell by 111,000 jobs between January and April, StatsCan said.

The goods-producing sector, which is the most exposed to U.S. tariffs, saw employment drop by 26,800 jobs in April, while the services sector, where four out of every five people are employed, reported a gain of 9,100 jobs.

DATA INDICATES MORE PEOPLE LOOKING FOR WORK

Average hourly wages of permanent employees, a metric closely tracked by the BoC to gauge the rise in inflation expectations, grew 4.8% from a year earlier, versus 5.1% in March.

The participation rate - the portion of the population over the age of 15 that is economically active - edged up to 65% in April from 64.9% in the prior month, StatsCan said.

A higher participation rate along with a higher unemployment rate indicates more people are searching for work in the economy.

The unemployment rate among the core-aged workforce of 25-54 year-olds as well as among the youth increased to 6% and 14.3%, respectively.

"For the Bank of Canada, evidence that slack within the labor market is, if anything, increasing rather than reducing, should limit the ability for the oil price shock to spread into wider inflationary pressure," Andrew Grantham, a senior economist at CIBC Capital Markets, wrote in a note.

CIBC expects Canada's central bank to leave interest rates unchanged throughout 2026, he said. Money markets are pricing in one 25-basis-point rate hike in October, which would bring the Bank of Canada's policy interest rate to 2.5%.

The Canadian dollar was trading down 0.6% to C$1.3673 against the U.S. dollar, or 73.14 U.S. cents. Yields on two-year government bonds were down 8.4 basis points to 2.501%. (Reporting by Promit Mukherjee; Editing by Dale Smith, Alexandra Hudson and Paul Simao)