Mark Carney in dire straits: Canada, one of the largest and richest countries in the world, added just 7,400 jobs in April as unemployment rate rises to 6.9%

Time of India

09-05-2025

Why is Canada's unemployment rate rising now?
How badly is the manufacturing sector being hit?
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Is the bank of Canada planning to cut interest rates?
What's happening with wage growth and public sector jobs?
Is Canada's job market falling behind population growth?
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Canada's job market took a hit in April, with just 7,400 new jobs added and the unemployment rate climbing to 6.9%, its highest level since November 2023. As one of the world's wealthiest and most resource-rich nations, this sharp slowdown in employment growth raises fresh concerns about the country's economic resilience. Much of this weak job performance is being linked to U.S. tariffs, especially those targeting key Canadian exports like steel, aluminum, and automobiles.Data from Statistics Canada paints a troubling picture: nearly 1.6 million Canadians are now out of work, and the job market is starting to show serious cracks under growing international pressure.The unemployment rate in April reached 6.9%, matching levels last seen in November, and edging past analysts' expectations of 6.8%. While the economy technically added jobs—7,400 net gains—this growth was too small to keep up with the expanding labor force. Last month, the country lost 32,600 jobs, making April's improvement look modest by comparison.The driving force behind these numbers? A combination of U.S. trade tariffs and slowing export demand. Donald Trump's tariffs on Canadian steel, aluminum, and now vehicles have begun to bite, hitting manufacturing jobs hard.In one of the starkest signals yet, 31,000 jobs were lost in Canada's manufacturing sector in April alone, according to Statscan. That's a serious blow for an economy heavily reliant on exports. The job losses were directly tied to U.S. import duties and the broader uncertainty caused by the trade tensions.Retail and wholesale trade also showed weakness, with both sectors posting job losses. 'People who were unemployed continued to face more difficulties finding work in April than a year earlier,' Statscan reported.Among those unemployed in March, 61% remained unemployed in April, up nearly 4 percentage points from the same time last year.With economic data weakening and job growth barely moving, many economists now expect the Bank of Canada to respond with an interest rate cut in June. Market odds for a 25 basis point cut now sit above 55%, according to the currency swap market.Ali Jaffery, senior economist at CIBC Capital Markets, said the job market was already soft before the trade war started and now appears "like it could soon buckle."The Canadian dollar edged up slightly by 0.1% to 1.3909 U.S. dollar (around 71.90 cents), while two-year government bond yields fell by 3.3 basis points to 2.586%, reflecting growing investor concern.There were some positive signs in the data, though limited. Public sector employment grew by 23,000 jobs (0.5%) in April, mainly due to temporary hires related to the federal election. However, outside of this bump, job growth remained stagnant.Wage growth also remained flat. Average hourly wages for permanent employees rose 3.5% year-over-year, the same pace as in March. While wage growth at this level can help workers keep up with inflation, it doesn't signal strong labor market momentum.Another concern raised by Statistics Canada was the employment rate, which measures the share of the working-age population with jobs. That figure dropped to 60.8% in April, the lowest in six months. In March, it had already dipped by 0.2 percentage points.This decline reflects a broader trend where employment gains haven't kept pace with population growth. While population growth has recently slowed, hiring has cooled even faster, putting pressure on the labor force and social systems.Due to weak job growth and U.S. tariffs hitting manufacturing.Markets expect a likely rate cut to support the slowing economy.