Canada’s labour market weakened sharply in August, losing about 42,000 jobs while the national unemployment rate remained unchanged at 6.4%. The result surprised economists, who had expected another month of hiring, and marked a reversal after several stronger employment reports earlier in the summer.
The seasonally adjusted decline was approximately 41,700 jobs. A Reuters poll cited by CBC had forecast a gain of about 15,000, while Canada had added 75,000 jobs in July.
Why unemployment stayed at 6.4%
The unemployment rate did not increase despite the job losses partly because fewer people were participating in the labour market. Canada’s participation rate slipped 0.1 percentage points to 65.0%, while the employment rate fell to 60.8%.
About 1.5 million people were unemployed in August, and roughly 24% had been searching for work for at least 27 weeks, showing that long-term unemployment remains a pressure point beneath the headline rate.
Full-time and public-sector employment weakened
The decline was concentrated largely in full-time work. Public-sector employment fell by about 20,000, marking a third consecutive monthly decrease, while private-sector employment was little changed.
Young workers were also affected, with employment among people aged 15 to 24 falling by around 19,000. The youth unemployment rate remained at 12.9%.
Manufacturing added 22,000 jobs
Manufacturing was the strongest part of the August report, adding 22,000 jobs and becoming the only major sector to record a statistically significant employment increase.
Business, building and other support services lost about 20,000 positions, while public administration, natural resources and utilities also recorded declines.
The uneven sector picture comes as companies adjust to 50% U.S. tariffs affecting Canadian products, adding uncertainty for exporters and industries dependent on American demand.
Ontario and Quebec recorded the largest losses
Quebec lost about 19,000 jobs in August, while Ontario employment declined by roughly 18,000. New Brunswick added around 2,400 positions, while employment changed little across most other provinces.
Average hourly wages rose 2.0% from a year earlier to $37.02, slower than the 2.8% annual increase recorded in July. Employment nevertheless remained roughly 217,000 higher than a year earlier.
Trade tensions increase economic uncertainty
The jobs report arrives as Canada and the United States face heightened trade tensions. The U.S. imposed 50% tariffs on roughly C$28 billion worth of Canadian goods in August, while Canada announced counter-tariffs covering C$27.6 billion of U.S. products scheduled to begin September 8.
The dispute has also put pressure on the Canadian dollar amid uncertainty over U.S. trade talks. Statistics Canada has said industries dependent on American export demand have faced a higher average layoff rate than other industries over the past year.
Ottawa recently announced an additional C$7.5 billion in economic relief for affected workers and businesses, on top of nearly C$25 billion in previous tariff-related support.
Canada is also gradually diversifying its export markets. The U.S. share of Canadian exports averaged 76% in 2024 and 72% in 2025 before falling to 66% in July 2026 as exports to other markets, including Europe, grew faster.
For the full employment breakdown by age, industry and province, see the official Statistics Canada Labour Force Survey for August 2026.
What the August jobs report means for Canada
August is a setback after stronger hiring earlier in the year, but one month does not confirm a prolonged downturn. The next labour reports will be more important for judging whether weaker hiring, slower wage growth and trade uncertainty are developing into a broader slowdown or remain a temporary soft patch.
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