Canada's unemployment rate jumps to 6.9 per cent
OTTAWA: Canada's unemployment rate rose to 6.9 per cent in April, the highest since November, as US tariffs started to hit Canada's export-dependent economy in earnest, data showed on Friday.
The high unemployment rate in Canada, where the number of jobless people is inching towards 1.6 million, was partly a result of US President Donald Trump's tariffs on a raft of Canadian imports, Statistics Canada said, referring to the jobs shed in the manufacturing sector.
Overall, the employment number was largely flat with minimal gains of net 7,400 jobs in April, it said. This was in contrast to a loss of 32,600 jobs the prior month. Analysts polled by Reuters had predicted employment to increase by 2,500 people and the unemployment rate to increase to 6.8%. The 6.9 per cent figure matched November unemployment, which was an eight-year high outside of the pandemic era.
Trump's tariffs on Canadian steel and aluminium in March and automobiles in April, along with import duties on a broad range of products with various reductions and exemptions have impacted businesses and households. The Bank of Canada has warned that growth would take a major hit in coming months as exports fall, prices increase, hiring reduces and layoffs accelerate. It has vowed to act decisively if the economy needs urgent support.
"Overall, we are seeing a job market that was weak heading into the trade war, now looking like it could soon buckle. Today's report supports the case for a Bank of Canada cut in June," said Ali Jaffery, senior economist at CIBC Capital Markets.
Currency swap market bets show odds of a 25 basis point rate cut in June at over 55 per cent roughly. The Canadian dollar was trading up 0.1% to 1.3909 US dollar, or 71.90 US cents. Yields on two-year government bonds fell 3.3 basis points to 2.586% after the labour force data was released.
The number of unemployed people, or those looking for work or on temporary layoff, increased by 39,000 or 2.6 per cent in April and was up by 189,000 or 13.9 per cent on a year-over-year basis.
"People who were unemployed continued to face more difficulties finding work in April than a year earlier," Statscan said, adding that among those who were unemployed in March, 61% remained unemployed in April which was almost four percentage points higher than the same period last year. The tariffs and the uncertainty around them especially hit the manufacturing sector which shed 31,000 jobs in the month, Statscan said, adding retail and wholesale trade also saw a drop in the number of employed people. — Reuters
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