Canada’s Job Market Weakens: 66,000 Jobs Lost in August, Unemployment Hits 7.1%

Canada’s labour market took another hit in August 2025, losing 66,000 jobs and pushing the national unemployment rate to 7.1% — its highest level since May 2016, excluding the pandemic. The data, released by Statistics Canada, marks the second consecutive monthly job loss, following a 41,000-job drop in July.

Economists had forecast a modest gain of 10,000 jobs and a 7.0% unemployment rate, making this result worse than expected. According to TD economist Leslie Preston, the unemployment rate would have been even higher if not for a 31,000-person drop in the labour force.

The job decline was broad-based:

• Professional, scientific and technical services: -26,000

• Transportation and warehousing: -23,000

• Manufacturing: -19,000

• Full-time jobs: -6,000

• Part-time jobs: -60,000
  One bright spot: the construction industry added 17,000 jobs.

Wage growth also cooled, with average hourly earnings increasing 3.2% year-over-year, down from 3.3% in July.

Analysts are now closely watching the Bank of Canada, which is set to announce its next interest rate decision on September 17. Some economists, including from TD and Capital Economics, believe the weak jobs data increases the likelihood of a 0.25% rate cut — possibly even two before the end of 2025.