Canada’s unemployment rate rose to 6.9% in April, reaching its highest level since November, as U.S. tariffs began to impact the country’s export-reliant economy, according to new data from Statistics Canada.
The number of unemployed individuals rose to nearly 1.6 million, with the labor market showing signs of strain under pressure from U.S. duties on Canadian steel, aluminum, automobiles, and other products. The manufacturing sector alone shed 31,000 jobs, while employment also declined in retail and wholesale trade.
While overall employment remained relatively stable, the economy added only a net 7,400 jobs in April, compared to a loss of 32,600 jobs in March. Analysts surveyed by Reuters had forecast a 2,500-job increase and a 6.8% unemployment rate.
“People who were unemployed continued to face more difficulties finding work in April than a year earlier,” said Statscan. Of those unemployed in March, 61% remained unemployed in April—about four percentage points higher than the same period last year.
The employment rate—the share of the working-age population with jobs—fell to 60.8%, a six-month low. Though population growth has slowed since February, job creation has not kept pace.
The public sector added 23,000 jobs (0.5%) in April, mainly due to temporary federal election hiring, after three months of little change.
The average hourly wage growth for permanent employees remained steady at 3.5%, a key indicator the Bank of Canada monitors for inflationary pressures.
Amid economic uncertainty, markets are now pricing in a greater than 55% chance of a 25 basis point interest rate cut in June, according to currency swap data. The Canadian dollar traded up 0.1% to 1.3909 per U.S. dollar (or 71.90 U.S. cents), while yields on two-year government bonds fell 3.3 basis points to 2.586% following the report.
Economists have warned that Canada’s job market was already cooling before the trade dispute escalated. “Today’s report supports the case for a Bank of Canada cut in June,” said Ali Jaffery, senior economist at CIBC Capital Markets.
