Unemployment was up for the second straight month in Canada and has reached the highest level since 2016 outside of the pandemic years, according to new data.
“Well, here’s a hit we’ve all been anticipating. The impact of tariffs and economic disruption is starting to show, and the numbers are worrying,” says economist Anupriya Gangopadhyay at the Canadian Chamber of Commerce.
“Canada’s August Labour Force release makes it clear…and the warning lights are flashing.”
Statistics Canada reported on Friday that in August, the national unemployment rate climbed to 7.1 per cent from 6.9 per cent in July.
August’s reading was also the highest unemployment rate in Canada since May 2016, excluding data from 2020 and 2021.
The agency reported Canada’s job market shed 66,000 positions in August, which was led by losses in part-time work.
A Reuters poll of economists heading into the release expected a gain of 10,000 jobs and the unemployment rate would rise to seven per cent for the month, according to LSEG Data & Analytics.
“A 66,000 employment decline Canada in August was after a 41,000 contraction in July, and adds to evidence that the trade war is taking its toll on Canadian labour markets,” says senior economist Claire Fan at the Royal Bank of Canada in a written statement.
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“The worsening trend in the summer also mirrors condition south of the border – job growth in the U.S. largely ground to a halt since May and the unemployment rate has also edged higher.”
The July labour force survey showed a loss of 41,000 jobs and an unemployment rate of 6.9 per cent.
Provincially, job losses in August fell the most in Ontario by 26,000, British Columbia with 16,000 jobs shed, and Alberta’s job market declined by 14,000 positions.
Data in the report also suggest it may be getting more difficult to find a job in Canada. The agency reports of those unemployed Canadians in July 2025, only 15.2 per cent were able to find work the following month, which is down from 23.3 per cent in the same months from 2017 to 2019.
Statistics Canada reported last week that the Canadian economy contracted in the second quarter as U.S. tariffs and trade uncertainty tanked Canadian exports.
The jobs report comes ahead of the Bank of Canada’s next interest rate decision set for Sept. 17.
– With files from The Canadian Press
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