Canada lost 33,000 jobs in March and the unemployment rate rose 0.1 percentage points to 6.7 per cent as U.S. tariffs on goods not compliant with the countries’ free-trade agreement and duties on steel and aluminum came into effect.
Trade uncertainty is causing vast fluctuations in job numbers. Earlier this year, the Canadian economy saw additional jobs as businesses pulled forward orders in anticipation of U.S. tariffs.
But now that many U.S. tariffs are in place, expect the trend in the upcoming months to be more layoffs and unemployment as tariffs cause widespread economic pains.
This will be especially prominent in trade-dependent industries such as wholesale and retail trade and manufacturing—especially in auto production and the production of steel and aluminum. Already, several auto manufacturing plants have halted production and temporarily laid off workers in response to the 25 per cent U.S. tariffs on all auto imports.
Tariffs are expected to raise car prices and thus lower demand for goods and services, leading to lower demand for talent and a slowdown of the economy overall—if not an outright recession.
Uncertainty about the overall economy and recession fears, including concerns about a potential global recession, could lead to layoffs and delays in hiring across sectors.
Given the unexpected large job losses in March, the Bank of Canada might cut the key interest rate again this month to 2.5 per cent. This could be done even though underlying inflationary pressures remain in Canada and U.S. tariffs are in place for nearly every country.
Unsurprisingly, the drop is most prominent in trade, which lost 28,500 jobs in March.
Information, culture and recreation also saw jobs falling by 20,000; business, building and support services jobs fell by 10,300 and agriculture jobs fell by 9,300.
Ontario saw the biggest drop of 28,000 jobs as the province with the largest manufacturing sector, followed by Alberta at 15,000 jobs due to its energy sector.
A look into the data reveals more trouble as full-time employment fell by 62,000, while 29,500 part-time jobs were added. A loss in full-time employment means that the hit to the economy is even greater.
All of the job losses were due to business layoffs as private sector employment fell 48,000, while public sector and self-employment saw little change in March.
Hourly wages rose 3.6 per cent on an annual basis, a number that has not been this low since early 2022. The tailwinds for job-seekers are largely over, wage gains are slowly falling to match inflation and the job market is turning into a sellers’ market. Those unemployed are having a harder time landing jobs as the demand for talent dwindles.
