Canada’s unemployment rate rises as economy loses 33,000 jobs

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Statistics Canada said on Friday that the unemployment rate in Canada rose to 6.7 per cent in March, up from 6.6 per cent the previous month as the economy lost 33,000 jobs.

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Since January 2022, employment losses have been the biggest reduction in employment. Reuters surveyed economists and expected 10,000 jobs to add to the month.

Nearly 1.5 million people were unemployed in March, an increase of 36,000 from the previous month, and 167,000 a year ago. Employment wholesale and retail trade, information, culture and entertainment, agriculture, manufacturing and construction industries.

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“Wheels may begin to deviate from the Canadian labour market, with workloads falling by 33,000 in March, far from reaching the consensus forecast of 10,000,” Andrew Grantham, an economist at CIBC Capital Markets, said after releasing the data.

In March, private sector employment fell by 48,000, while public sector employment was small. Full-time jobs fell by 0.4%, and overall employment declined.

Toronto – “The impact of trade tariffs appears to be developing through the economy,” James Orlando, a senior economist at Dinominion Bank, said in a notice to clients. “In the face of increasing political uncertainty, businesses and consumers will naturally hesitate.”

Last month, when the Bank of Canada lowered its interest rates to 2.75%, it released its findings from business and consumer surveys that showed businesses planned to retreat amid trade uncertainty with the United States.

In early March, U.S. President Donald Trump imposed a 25% tariff on Canadian goods, not compliant with the US Mexico Agreement (CUSMA), and imposed a 10% tariff on Canadian energy that is not compliant with the Cusma. He also imposed a 25% tariff on Canadian steel and aluminum on March 12 and imposed tariffs on unmade U.S. cars on April 3.

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“Many businesses have shrunk their recruitment and investment plans due to all these trade-related factors,” Bank of Canada Governor Tiff Macklem said in his last policy rate announcement on March 12.

Statistics Canada said on Friday that 0.7% of those employed in February were unemployed due to layoffs. The layoffs have little change from a year ago and are the same as the pre-pandemic average.

“Measurement of the contribution of spinning tariffs is a key issue in soft march numbers, but we don’t see smoking guns,” indeed Canada’s senior economist Brendon Bernard said in a note. “Instead, March’s weakness stems from a continuation of trends in the job market in 2024, namely slow hiring, which makes it difficult for those who are unemployed to find jobs.”

Economists say weak job reports could allow Canadian banks to lower their tax rates in their next decision on April 16.

“While April pricing remains undetermined, we believe banks should cut at least 50 basis points (accumulative) in the coming months to mitigate the hit by tariffs,” Orlando said. “Today’s disheartened work report demonstrates the downside risks of the economy, which deserves further action by Bank of Canada.”

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Grantham said the job market is expected to continue to decline, especially in sectors most directly affected by U.S. tariffs. CIBC expects unemployment to be slightly higher than 7% in the second half of this year.

He said the Canadian bank’s business and consumer outlook survey on Monday will also be key to the central bank’s next tax rate decision.

Total hours increased by 0.4% in the month, up 1.2% from the total a year ago. After a 3.8% increase in February, average hourly wages rose 3.6% year-on-year.

•Email: jgowling@postmedia.com

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