Canada’s labour market softened further in August, with employment declining by 66,000 jobs and the unemployment rate rising to 7.1% adding more pressure to the Bank of Canada to stem the bleeding taking place in the economy.

Statistics Canada is reporting that unemployment has grown to 7.1% in August, the highest since May 2016, excluding the COVID-19 pandemic. The latest economic report by Statistics Canada marks the second consecutive month of job losses, adding to signs of a cooling labour market amid a period of broader economic uncertainty.

It comes ahead of the Bank of Canada’s next interest rate decision scheduled for September 17. Statistics Canada reports that the layoff rate was 1 per cent, up from 0.9 per cent a year earlier, and only 15.2 per cent of those seeking work in July had found a job in August, a proportion significantly lower than the pre-pandemic average of 23.3 per cent from 2017 to 2019.

Job losses

The job losses were largely in part-time work, with a net contraction of 60,000 positions. Full-time employment, which had recorded a loss of over 50,000 jobs the month before, was little changed. 

Jobs for youth were similarly steady following a major drop in July, but positions for core-aged (25-54 years old) men and women fell by a net 58,000 and 35,00,0, respectively. Meanwhile, full-time employment held steady after a slight contraction in July, suggesting firms are hesitant to hire amid persistent inflation and higher borrowing costs.

Core-aged Canadians, those between 25 and 54, bore the brunt of the August losses, with employment among men falling by 58,000 jobs and 35,000 among women. This pushed their respective unemployment rates to 6.4% and 5.7%, both increasing by 0.3 percentage points month-over-month. Industry-level data highlighted sharp job contractions in professional, scientific and technical services (-26,000), transportation and warehousing (-23,000), and manufacturing (-19,000). 

Unemployment by province

The construction sector was a rare bright spot, adding 17,000 jobs, its strongest gain since January and a partial rebound from losses in July. Regionally, Ontario saw the largest employment decline, shedding 26,000 positions, followed by British Columbia (-16,000) and Alberta (-14,000).

Unemployment rates in these provinces were above the national average, with Alberta recording the steepest increase, up 0.6% to 8.4%. The national participation rate edged down 0.1 percentage points to 65.1%, indicating a slight retreat from the labour market. 

Broader indicators of slack also worsened, with 8.8% of employed Canadians saying they wanted to work more hours—highlighting a rise in underemployment, particularly in provinces hit hardest by layoffs. The labour market remains especially challenging for young people and returning students, who face some of the highest unemployment rates this summer since the 2009 financial crisis. 

In August, the jobless rate for returning students hit 16.9%, and was even higher at 17.9% for the full summer average. Multiple jobholding remains relatively steady, with 5.4% of Canadians holding more than one job in August. 

However, the reasons behind that trend underscore ongoing financial pressure—33.6% cited the need to pay for essential needs, while another third pointed to the desire for extra income.