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The Canadian economy shed 33,000 jobs in March according to Statistics Canada — the biggest loss since January 2022.
The agency said the unemployment rate also ticked slightly higher, rising to 6.7 per cent in March from 6.6 per cent in February.
The overall decrease also came as 62,000 full-time jobs were lost in the month, partly offset by a gain in part-time employment.
The latest data shows a reversal of some of the job growth that came at the end of last year and into January. While February posted fairly stagnant jobs numbers, January saw 76,000 new jobs created and December had 91,000.
The hit came amid increased uncertainty caused by U.S. tariffs that have threatened economic growth.
RSM Canada economist Tu Nguyen said the result was a glimpse of what may be in store as the trade dispute with the U.S. ramps up and the country faces the possibility of a recession.
“We saw a lot of layoffs happening in trade in March and we expect April to see even more layoffs and a rise in the unemployment rate,” she said. “Some manufacturing plants, especially in auto production, have already laid off their workers.”
Automaker Stellantis confirmed yesterday they will be halting production at their Windsor, Ont. assembly plant for two weeks in April. A spokesperson for the company said 3,200 Canadians would be impacted, though these jobs are not captured in the March numbers released today from Statistics Canada.
Indeed senior economist Brendon Bernard said slow hiring contributed to the slump in jobs. He also adds trouble due to tariffs is likely on the horizon.
“This rate isn’t bad by historic standards, but we’re still waiting for the real hit from the trade war. With global stock markets now falling, the storm clouds in the horizon are quickly approaching,” Bernard said in a statement.
But Doug Porter, chief economist at BMO, said trade uncertainty isn’t entirely to blame for the job losses so far.
“The weakness was fairly broad-based that wasn’t just in the sectors that would be directly related to trade,” he said. “But this is [one of] the weakest reports we have seen in a number of years.”
StatsCan’s data showed the wholesale and retail trade sector lost 29,000 jobs in March, following an increase of 51,000 in February. The information, culture and recreation sector lost 20,000 jobs, while the agriculture sector lost 9,300. Meanwhile, the “other services” sector, which includes personal and repair services, added 12,000 jobs. Utilities added 4,200.
Total hours worked were up 0.4 per cent in March, following a drop of 1.3 per cent in February. Average hourly wages among employees also rose 3.6 per cent on a year-over-year basis in March.
Puts the Bank of Canada in a difficult spot: expert
The Bank of Canada will make their next interest rate decision on April 16, and economists say this data complicates that choice for the central bank. The lending rate currently stands at 2.75 per cent, following a cut by the bank last month.
The rule of thumb for central banks is that they raise the lending rate in order to tame inflation but lower the rate when unemployment is higher. Nguyen said the fact that there is still some underlying inflation makes the Bank of Canada’s decision difficult.
Just 12 hours after U.S. auto tariffs came into effect, Stellantis temporarily shut down its Windsor, Ont., assembly plant and laid off thousands of workers. Multiple auto plants in the U.S. and Mexico have also announced temporary layoffs.
“But given how weak the March jobs report is and given we are foreseeing a recession given the current tariff rate, I think the Bank of Canada might consider lowering the interest rate to 2.5 per cent,” she said.
Porter also says the economic situation of the last 48 hours increases the odds the Bank of Canada will cut interest rates in mid- April.
U.S. sees unexpected uptick in jobs
On the south side of the border, where the U.S. Labor Department also released job numbers today, the picture was quite different.
Non-farm payrolls in the U.S. increased by 228,000 jobs last month, following a revised 117,000 increase in February, the department said in its closely watched employment report on Friday.
Economists polled by Reuters had forecasted a smaller increase of 135,000 jobs, after a previously reported 151,000 rise in February.
The unemployment rate rose to 4.2 per cent from 4.1 per cent in February. The labour market is being underpinned by low layoffs, generating solid wage gains that are helping to sustain the economic expansion.
But businesses there have been hesitant to hire because of the U.S.’s uncertain trade policy. That caution could give way to job cuts after U.S. President Donald Trump unveiled sweeping tariffs on Wednesday.
Americans offered mixed opinions on President Donald Trump’s sweeping new tariffs, outside the New York Stock Exchange on Thursday. The U.S. stock market led a global market meltdown amid fears of a spike in costs for businesses and households.
Trump’s tariffs blitz since returning to the White House has already unnerved businesses, many of which had cheered his electoral victory in November. The report could offer some short-term relief to financial markets roiled by the import duties.
Data and sentiment surveys have suggested the economy stalled in the first quarter because of trade policy uncertainty and winter storms. Economists are also not ruling out a recession in the next 12 months.
Federal Reserve chair Jerome Powell said Friday that the high level of uncertainty could lead to increased unemployment going forward.
But the central banker also addressed the tension between real economic data that is positive, like the job numbers out today, and “soft” economic data like surveys and industry analysis that points to a slowdown.
“We are closely watching this tension between the hard and soft data. As the new policies and their likely economic effects become clearer, we will have a better sense of their implications for the economy and for monetary policy,” Powell said.
