By Promit Mukherjee
OTTAWA (Reuters) – Canada’s total employment fell and the unemployment rate ticked up in March, data showed on Friday, as the uncertainty around tariffs and their subsequent implementation took a toll on hiring and spurred some layoffs.
The country’s employment number dropped by a net 32,600 people, the first decrease in more than three years, driven by a steep decline in full-time work, Statistics Canada said.
The decline in March followed largely flat growth in jobs in February and robust expansion of 211,000 new jobs from November to January. The unemployment rate rose to 6.7% from 6.6% a month earlier.
Analysts polled by Reuters had forecast a net job addition of 10,000 people and had estimated the unemployment rate to rise to 6.7%.
Most economists had expected the job market to start showing signs of weakening as companies held back on investments and hiring due to the uncertain tariff situation.
U.S. President Donald Trump imposed a 25% tariff on Canadian steel and aluminum from March and slapped import duties on cars and parts based on non-U.S. content and non-compliance to a free trade deal. He also announced sweeping reciprocal tariffs across all trading partners.
These reciprocal tariffs and retaliation by many countries are expected to hit the global economy hard, pushing many countries into recession, analysts have said.
CHINA RETALIATES
The Canadian dollar was trading down 0.72% to 1.4194 to the U.S. dollar, or 70.45 U.S. cents, after China imposed retaliatory tariffs on the United States.
Currency markets are betting that there is a 62% chance of yet another rate cut by the Bank of Canada on April 16, a sharp turn from just a 25% chance seen a day earlier.
Reuters had reported last month that job losses had already started in some sectors, and economists predict that these will only rise as sweeping reciprocal tariffs across trading partners work through the system.
The rise in the unemployment rate, or the number of people unemployed as a percentage of the labor force, was the first increase since November, Statscan said.
In total, there were 1.5 million unemployed people in March, up 36,000 in the month and up 167,000 on a year-over-year basis, it said.
The Bank of Canada said last month that Canadians were more worried about their job security and financial health as a result of the trade tensions, and they intend to spend more cautiously.
Statscan said that among the total unemployed, about 44% had lost their job due to a layoff within the previous 12 months. Of these, 18.4% last worked in construction, while 12.4% last worked in wholesale or retail trade.
However it clarified that the March layoff rate – the proportion of the employed population in a given month who were unemployed the following month due to a layoff – was 0.7%, similar to the pre-pandemic period.
The average hourly wage growth of permanent employees, a metric closely watched by the BoC too gauge inflationary trends, was at 3.5% in March from 4% in February.
(This story has been corrected to say first drop in jobs to more than three years, not two, in the headline and paragraph 2)
(Reporting by Promit Mukherjee; Editing by Dale Smith and Mark Porter)
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