Canada's Job Market Faces Setback Amid Tariffs and Economic Challenges

Canada's economy saw a decrease of 40,800 jobs in July, revising gains from June. The employment rate dropped while the unemployment rate stays near a multi-year high. Tariffs on key sectors have resulted in layoffs, with anticipation of further job losses. The Bank of Canada may adjust policy rates due to these conditions.

Canada's job market experienced a significant downturn in July with the economy losing 40,800 jobs, undoing the previous month's gains. The employment rate fell to 60.7%, the lowest in eight months, according to Statistics Canada. Meanwhile, the unemployment rate clung to a near multi-year high of 6.9%.

Analysts had predicted a modest increase of 13,500 jobs with an uptick in unemployment to 7%. Senior Economist Michael Davenport pointed out that tariffs on steel, aluminum, and autos imposed by the U.S. have hit Canadian manufacturing hard, leading to reduced hiring.

Manufacturing jobs shrank by 10,000, impacting sectors tied to steel and autos. More layoffs are anticipated, with predictions of 140,000 job losses and a rise in the unemployment rate. Despite this, the Bank of Canada maintained its policy rate, leaving room for potential decreases if conditions persist.

(With inputs from agencies.)