Canada experienced a drop in overall employment and a slight uptick in the unemployment rate in March, according to data released on Friday, as uncertainty over tariffs and their implementation weighed on hiring and led to some layoffs.
Statistics Canada reported that the country’s employment declined by a net 32,600 people — the first such decrease in over three years — largely due to a significant drop in full-time positions.
This decline comes on the heels of near-flat job growth in February and a strong increase of 211,000 new positions between November and January. The unemployment rate edged up to 6.7 percent from 6.6 percent the previous month.
Economists surveyed by Reuters had anticipated a net gain of 10,000 jobs and had also forecast the jobless rate to rise to 6.7 percent.
Most analysts had been expecting the labor market to begin showing signs of strain, as businesses delayed hiring and investment decisions amid ongoing tariff uncertainties.
U.S. President Donald Trump introduced a 25 percent tariff on Canadian steel and aluminum starting in March, and also levied import duties on vehicles and parts that failed to meet U.S. content or free trade agreement criteria. In addition, sweeping reciprocal tariffs were announced on all trading partners.
Analysts warn that these tit-for-tat tariffs and retaliatory measures by other nations could severely impact the global economy, potentially leading several countries into recession.
CHINA RESPONDS
Following China’s imposition of retaliatory tariffs against the U.S., the Canadian dollar fell by 0.72 percent to 1.4194 per U.S. dollar, or 70.45 U.S. cents.
Currency traders are now pricing in a 62 percent chance of another Bank of Canada interest rate cut on April 16 — a significant increase from the 25 percent probability seen just a day earlier.
Reuters reported last month that layoffs had already begun in select sectors, and economists expect this trend to accelerate as the effects of global trade tensions ripple through economies.
According to Statscan, March marked the first monthly rise in the unemployment rate since November. There were 1.5 million unemployed individuals in March — an increase of 36,000 from the previous month and 167,000 year-over-year.
The Bank of Canada noted last month that Canadians are increasingly concerned about their job security and financial stability due to trade-related uncertainties, and many are planning to tighten their spending.
Statscan also highlighted that roughly 44 percent of those unemployed had lost their jobs due to layoffs within the past year. Among these, 18.4 percent previously worked in construction, and 12.4 percent in wholesale or retail trade.
Despite the spike in unemployment, the layoff rate — the share of employed people who became unemployed due to layoffs from one month to the next — stood at 0.7 percent, which is in line with pre-pandemic levels.
The average hourly wage growth for permanent employees, a key indicator for the Bank of Canada in monitoring inflation, eased to 3.5 percent in March from 4 percent in February.
