Canada Jobless Rate Hits 6-Month High Amid Tariffs

Canada job market showed fresh signs of strain in April, with unemployment climbing to 6.9%, its highest level since November. The increase—up 0.2 percentage points from March—comes amid ongoing trade frictions with the United States that are hitting key economic sectors hard.

Manufacturing and Retail Sectors Bear the Brunt

According to Statistics Canada, the manufacturing industry was particularly impacted, shedding 31,000 jobs in a single month. The wholesale and retail trade sectors followed closely with 27,000 job losses. Analysts link much of this disruption to tariffs imposed by the U.S. on Canadian steel, aluminum, and auto exports—an aggressive protectionist move that has sent ripples through Canada’s export-reliant economy.

Public Sector Hiring Offers Some Relief

While the private sector faltered, the public sector saw modest gains. Employment there rose by 23,000 jobs (a 0.5% increase), attributed largely to temporary staffing needs for the federal election held on April 28. This bump helped offset broader job losses and kept overall employment numbers from falling further.

Wage Growth Steady, But Job Market Slackens

Wage growth remained steady, with the average hourly pay for permanent employees growing at 3.5% in April—the same pace as in March. This stability offers some comfort to policymakers at the Bank of Canada, who closely monitor wage trends as a measure of underlying inflation.

Still, the employment rate—a more comprehensive measure of labor market strength—fell to 60.8%, the lowest level in six months. The gap between job creation and population growth continues to widen, with slower employment gains unable to keep pace with Canada’s growing working-age population.

Unemployment More Persistent Than Before

Statistics Canada also flagged growing difficulties for those already out of work. Of those unemployed in March, 61% remained without a job in April—almost 4 percentage points higher than during the same period last year. This suggests that jobseekers are facing a tougher, more competitive market.

Economic Outlook Dims as Bank of Canada Considers Rate Cuts

The economic outlook has darkened significantly, with the Bank of Canada warning of slower growth ahead. The central bank has signaled a willingness to intervene should conditions worsen, possibly through interest rate cuts.

Ali Jaffery, senior economist at CIBC Capital Markets, noted that the labor market was already showing signs of weakness before the latest trade tensions. “Now it looks like we’re entering a more critical phase. Today’s report increases the likelihood of a Bank of Canada rate cut in June,” he said.

Looking Ahead: A Need for Policy Response

As Canada navigates this economic turbulence, policymakers face mounting pressure to cushion the blow of international trade disputes and support domestic industries. A combination of targeted fiscal measures, infrastructure spending, and retraining programs for displaced workers may be needed to stabilize the job market and encourage long-term resilience.