Canada’s tepid pace of job creation last month sent the unemployment rate soaring back to a level last seen in November, the highest since January 2017 outside of the pandemic.
Employment grew by just 7,400 positions in April, and the jobless rate rose 0.2 percentage points to 6.9%, Statistics Canada data showed Friday. The median projection in a Bloomberg survey of economists saw similar numbers of jobs added but anticipated unemployment to increase by a smaller magnitude.
April is the third month in a row where the Canadian economy either saw very little change in employment or job losses, underscoring a slowdown in hiring or downsizing amid trade uncertainty. It’s also the first month where the tariff impact on export-dependent jobs in auto, steel, aluminum, and other sectors becomes more evident.
The loonie held the day’s advance versus the US dollar and traded at C$1.3914 as of 8:35 a.m. in Ottawa. Front-end Canadian debt maintained gains on the session, with the two-year yield down about two basis points to 2.57%.
Traders in overnight swaps upped their bets for a rate cut at the Bank of Canada’s next decision on June 4, putting the odds at just over a coin flip after the release.
The manufacturing sector lost 31,000 jobs, the biggest drop since January 2009 outside of the Covid-19 crisis in 2020. On a percentage basis, the decline of 1.6% for the sector was the most since November 2019, also excluding the pandemic.
Ontario, the country’s factory heartland, saw the steepest plunge in this industry among the provinces. In Windsor, the auto industry hub, the unemployment rate jumped 1.4 percentage points to 10.7%, the highest among 20 of Canada’s largest metropolitan areas.
Most of the job gains last month came from public administration, driven by a hiring blitz during a federal election campaign, likely masking weakness elsewhere.
The number of unemployed people looking for work or on temporary layoff rose by 39,000 in April. Among those who were unemployed in March, 61% remained unemployed in April, higher than the 57.3% share seen a year ago.
The participation rate increased by 0.1 percentage points to 65.3% because there were more people in the job market.
The employment rate — the proportion of the working-age population that’s employed — fell 0.1 percentage points to 60.8%, matching a recent low seen in October last year.
Yearly wage growth for permanent employees held steady at to 3.5%, versus economist expectations for a deceleration to 3.3%.
Total hours worked rose 0.4% in April and were up 0.9% compared to a year ago.