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August’s Job Numbers are Sobering but Unsurprising

Canadian Economics

By: Maxime Arseneau

    

Employment declined by 41,700 (–0.2 per cent) in August following three consecutive on robust employment growth. The labour force participation rate fell to 65.0 cent and the unemployment rate stayed unchanged at 6.4 per cent. On a year-over-year basis, average hourly wages growth decelerated to 2.0 per cent, down from 2.8 per cent in July.

  • The goods producing sector saw its employment increase slightly (+9,800). Job gains were concentrated in manufacturing (+22,100) while the other industries experienced some losses.
  • Manufacturing employment reached its highest level in eight months, although it remains below the levels recorded in early 2025.
  • In the services-producing sectors (–51,500), employment losses were led by business services (–19,900), wholesale and retail services (–10,500), and financial services (–9,600). 
  • Provincially, Quebec experienced the strongest decline (–18,500) followed closely by Ontario (–18,100).
  • Alberta (–8,900) and British Columbia (–5,500) also posted job losses, while the remaining provinces recorded modest employment gains.

Key insights

Labour market performance has been volatile over the past year and a half, with sustained momentum proving difficult to maintain for more than a few consecutive quarters. Looking ahead, the renegotiation of CUSMA is likely to add another layer of uncertainty, particularly following the recent wave of U.S. tariffs and Canada’s subsequent retaliatory measures. Most concerning over the next few months is the divergence in the two countries’ negotiating strategies. Canada currently appears inclined to buy time, potentially seeking to secure more favourable terms after the U.S. midterm elections, while the U.S. administration appears to see continued tariff pressure as a means of maintaining leverage at the negotiating table.

Early evidence points to emerging effects of AI adoption on labour markets. In a previous research, we measured the exposure score of over 500 hundred occupations to automation technologies such as AI and robotics. Recent LFS data show that job seekers in occupations with higher exposure to these technologies are having greater difficulty finding work. According to our Canadian Hiring Index, job postings in the business, finance and administration occupations have trending downward for a few years now and remain below their 2019 levels. This is also consistent with job postings for these occupations, which increasingly reference AI-related skills.

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