Canada’s job market took a hit in March, with 33,000 jobs gone and the unemployment rate rising to 6.7 percent, according to new data from Statistics Canada.
This is the biggest drop in employment since January 2022, with most experts expecting the country to add jobs, not lose them. A Reuters poll of economists had predicted a gain of 10,000.
Nearly 1.5 million Canadians were without work in March—36,000 more than in February and 167,000 more than this time last year. Sectors like retail, wholesale trade, recreation, culture, farming, manufacturing, and construction were all hit with job losses.
“The wheels may be starting to fall off the Canadian labour market, with a 33,000 decline in jobs during March falling well short of consensus forecasts for a 10,000 gain,” Andrew Grantham, an economist at CIBC Capital Markets, said in a note after the data was released.
Private-sector jobs dropped by 48,000 in March, while public-sector jobs stayed mostly the same. Full-time work was down by 0.4 percent, making up a large part of the overall employment drop.
“The impact of trade tariffs appears to be working its way through the economy,” James Orlando, senior economist at Toronto-Dominion Bank, said in a note to clients, according to the Financial Post. “Businesses and consumers are naturally hesitant in the face of heightened political uncertainty.”
Last month, the Bank of Canada dropped its key interest rate to 2.75 percent. It also said that businesses were planning to slow down hiring due to trade issues with the United States.
In early March, US President Donald Trump imposed a 25 percent tariff on Canadian goods that don’t meet the Canada-United States-Mexico Agreement (CUSMA), with there also being a 10 percent tariff on non-compliant Canadian energy, plus a 25 percent tariff on Canadian steel and aluminum on March 12. Cars not built in the US were hit with a 25 percent tariff starting April 3.
“As a result of all these trade-related factors, many businesses have scaled back their hiring and investment plans,” Bank of Canada Governor Tiff Macklem said during the bank’s last policy rate announcement on March 12.
According to Statistics Canada, 0.7 percent of employed people in February were laid off in March. That layoff rate hasn’t changed much from last year and is the same as before the pandemic.
“Gauging the contribution of swirling tariff winds is the key question in the soft March numbers, but we didn’t see the smoking gun,” Brendon Bernard, senior economist at Indeed Canada, said. “Instead, March’s weakness stemmed from a continuation of the trends that weighed on the job market in 2024, namely, slow hiring, which has made it tougher for those out of work to land a job.”
Economists say the weak jobs report might push the Bank of Canada to cut interest rates again when it makes its next decision on April 16.
“While pricing for April is still undecided, we think the bank should keep cutting by at least another 50 basis points (cumulative) over the coming months in order to cushion the blow from tariffs,” Orlando said. “Today’s discouraging jobs report showcases the downside risks to the economy, which warrants further action from the Bank of Canada.”
Grantham said he expects the job market to get worse, especially in industries that are most affected by the US tariffs. CIBC predicts the unemployment rate will go just above 7 percent later this year.
The Bank of Canada’s business and consumer outlook survey, coming out Monday, could play a big part in what the central bank does next.
Though there were fewer jobs, total hours worked went up by 0.4 percent in March and 1.2 percent compared to last year. Wages were also higher — hourly pay rose 3.6 percent from March 2024, after rising 3.8 percent in February.
