Murray Wood: Who's hot... and who's not
Every Friday, Murray Wood takes a look back at the week's news and decides who's hot... and who's not. This week's list ...
OTTAWA — Economists weren’t ringing any alarm bells after fresh data showed the labour market broke its hot streak with a loss of 42,000 jobs in August.
The unemployment rate held steady at 6.4 per cent last month, Statistics Canada said Friday.
August’s losses fell short of economists’ expectations for a gain of 15,000 positions.
Heading into last month, employers had been expanding payrolls at a steady pace. The economy added 181,000 positions from April through July, including a gain of 75,000 jobs in July alone.
Most economists weighing in Friday weren’t concerned to see the labour market give back some its recent gains.
Andrew Hencic, senior economist at TD Bank, suggested in a note to clients Friday that one month of soft data should not define the labour market. Steadiness in the unemployment rate is more important than the headline job losses, he argued.
“Although disappointing, given the noisy nature of the data a step backwards is not a major surprise after a string of hot reports,” Hencic said.
RBC senior economist Claire Fan said in a note that rising retirement rates from an aging population and a slowing pace of immigration are drivers of “dismal job growth.” She, too, pointed to the jobless rate as a more reliable indicator of labour market health.
The public sector shed 20,000 positions in August, marking its third straight month of losses, StatCan reported. The business, building and other support services sector led declines, followed by public administration, natural resources and utilities.
The manufacturing industry has been hit hard by U.S. tariffs but the sector proved to be a surprise pocket of strength in August with a gain of 22,000 jobs.
The United States imposed a new wave of 50 per cent tariffs targeting about $28 billion worth of Canadian goods on Aug. 22. Canada is set to impose its own retaliatory tariffs starting Sept. 8.
Andrew Grantham, a senior economist at CIBC, said in an interview that the August jobs data won’t necessarily capture that tariff shock because it’s based on surveys conducted mid-month.
Grantham said that an increase in hours worked in August might reflect firms racing to get products across the border before the new duties took effect. That boost may unwind come September, he noted.
StatCan said the layoff rate — the proportion of people who were unemployed as a result of layoffs between July and August — was 0.8 per cent in August. That rate stood at one per cent a year ago and averaged 0.9 per cent for the same months in the three years before the COVID-19 pandemic.
For industries reliant on export demand from the United States, StatCan said the layoff rate was marginally higher over the past 12 months when compared with other sectors.
The annual increase in average hourly wages cooled to two per cent in August, the agency said, down from 2.8 per cent in July and 3.3 per cent in June. The last time the annual wage increase was that low was November 2017.
Grantham cautioned that wage figures in the monthly labour force survey can be particularly volatile, but there does appear to be a deceleration in the pace of pay hikes.
He added that since wages are a lagging indicator, recent movements might reflect the uptick in the jobless rate earlier in the year rather than today’s labour market conditions.
The Bank of Canada held its benchmark interest rate steady at 2.25 per cent earlier this week.
The central bank signalled at the time that new U.S. tariffs were clouding the outlook for the economy. Governor Tiff Macklem said the economy was showing signs of a rebound heading into the re-escalating trade war, which puts Canada on more solid footing to handle the new duties.
At the same time, he said the central bank was concerned about lingering risks to inflation tied to the ongoing war in Iran.
Grantham said the weak August jobs numbers reinforce the case that growth is set to slow in the third quarter, adding to similarly soft data prints for exports and gross domestic product.
“It’s still far too early to sound any alarm bells, but it does seem to be consistent with that slowing trend that we’ve been seeing in some of the other reports,” he said.
Signs of cooling in the economy support CIBC’s call for the Bank of Canada to remain on hold for the rest of the year.
Grantham said that if global energy prices also start to recede, that will take enough steam out of inflation to keep the central bank on the sidelines through to the middle of 2027.
According to LSEG Data & Analytics, financial market odds of a quarter-point rate hike at the Bank of Canada’s next meeting on Oct. 28 were more than 25 per cent as of Friday at noon — still low but up sharply from the beginning of the week.
StatCan’s August report also marks the end of the summer jobs market for youth.
The agency said Friday that young workers aged 15 to 24 faced 19,000 job losses in August.
Despite a tough end to the season, StatCan said this past summer jobs market was statistically better for youth than last year.
On average, the jobless rate for students returning to school in the fall stood at 15.9 per cent from May to August this year — two percentage points lower than the same period in 2025.
This report by The Canadian Press was first published Sept. 4, 2026.
Craig Lord, The Canadian Press
