Canada’s job market experienced a setback in August with a loss of 42,000 jobs, according to Statistics Canada. This decline was unexpected, as economists had anticipated a fourth consecutive month of job gains following May’s results. Despite this, the unemployment rate remained stable at 6.4 percent for the month.

The latest Labour Force Survey revealed a decrease of 20,000 public sector jobs, marking the third consecutive month of decline in this sector. Private sector employment remained relatively unchanged. Notably, the manufacturing industry saw a positive trend by adding 22,000 jobs in August, while sectors like public administration, natural resources, and utilities reported job losses.

CIBC chief economist Andrew Grantham highlighted the significance of the manufacturing sector’s job growth in August. He mentioned that this aligns with other economic indicators, suggesting a slowdown in the economy for the third quarter, fueled by uncertainties surrounding U.S. trade relations.

Among the regions, Quebec suffered the most significant job loss with 19,000 fewer jobs, followed by Ontario with an 18,000 job decrease. Despite the soft report, Bank of Montreal chief economist Douglas Porter stated that the overall job market results were not surprising given the previous strong job performance.

Statistics Canada reported a slowdown in average hourly wage growth in August, reaching its lowest point in nearly nine years. The annualized wage growth rate dropped to two percent, down from 2.8 percent in July and 3.3 percent in June.

The recent job data contrasts with previous months’ positive trends. In July, the Canadian economy added 75,000 jobs, contributing to a total of 181,000 jobs from April to July. This downturn in job numbers comes at a time of heightened trade tensions between Canada and the United States, with both countries imposing tariffs on each other’s goods.

In response to the economic challenges posed by trade conflicts, the Canadian government introduced a $7.5-billion expanded economic relief program for affected workers and businesses. This program supplements the existing tariff support measures totaling nearly $25 billion implemented over the past 18 months.

Industries reliant on U.S. demand for exports continue to face uncertainty, as indicated by Statistics Canada. The agency highlighted that job losses in these sectors have been higher over the past year leading up to August compared to other industries. Shifts in export destinations away from the U.S. market towards other regions, particularly Europe, have been observed.

While Canada’s job market cooled in August, the U.S. Labor Department reported positive job gains in the United States. American employers added 162,000 jobs last month, with revisions to June and July figures adding a combined 55,000 jobs. The U.S. unemployment rate remained steady at 4.1 percent in August.

In response to the job data, U.S. President Donald Trump praised the strong numbers and hinted at potential Federal Reserve actions to lower interest rates. Meanwhile, in Canada, most economists anticipate the central bank to maintain its policy rate at 2.25 percent throughout the remainder of the year.