A Worker make jackets at the Canada Goose Factor in Toronto, Ontario, Canada.
Ontario: 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 become 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.
“We are seeing a job market that was weak heading into the trade war, now looking like it could soon buckle,” Ali Jaffery, economist at Canadian Imperial Bank of Commerce, said in a report to investors. “Today’s report supports the case for a Bank of Canada cut in June.”
Benjamin Reitzes, rates and macro strategist at Bank of Montreal, underscored that manufacturing only saw larger declines in the pandemic and global financial crisis over the past 19 years.
“Clearly the tariffs are weighing on the sector,” he said in an email.
“This is a weak report. Labor market slack is increasing, and wages are slowing.
This is the first big data reading for April and shows that tariffs are having a material negative impact on the economy.
This clearly increases the odds of a 25 basis-point rate cut,” Reitzes said.
