OTTAWA — The Canadian economy lost 33,000 jobs in March, marking the steepest monthly decline since January 2022, according to Statistics Canada. The national unemployment rate ticked slightly, rising to 6.7 per cent from 6.6 per cent in February.
The latest employment figures reflect a significant downturn in the labour market following months of relatively stable or positive job growth.
Notably, most of the losses came from full-time positions, with 62,000 full-time roles eliminated, partially offset by gains in part-time employment. The reversal follows strong job creation in January and December, when 76,000 and 91,000 jobs were added.
The sharp drop in employment coincides with escalating trade tensions. The United States imposed new tariffs, which have raised concerns over Canada’s economy.
Tu Nguyen, economist at RSM Canada, warned that March’s data is a precursor to more profound impacts as trade friction continues. “We saw a lot of layoffs happening in trade in March, and we expect to see even more layoffs and a rise in the unemployment rate in April,” Nguyen said.” Some manufacturing plants, especially in auto production, have already laid off their workers.”
Among those affected is automaker Stellantis, which confirmed plans to halt production at its Windsor, Ontario, assembly plant for two weeks in April. While this will impact around 3,200 workers, those layoffs are not yet reflected in the March employment data.
According to Indeed senior economist Brendon Bernard, sluggish hiring also contributed to the downturn. He pointed to growing concerns over tariffs and their potential impact. “This rate isn’t bad by his standards, but we’re still wary of the real hit from the trade war. With global stock markets now falling, the storm clouds on the horizon are quickly approaching,” he noted.
Do “g Porter, chief economist at BMO, added that while trade policy plays a role, the job losses were widespread across several sectors. “The weakness “was fairly broad-based and wasn’t just inwasn’tectors that would be directly related to trade,” Porter said.” “But this is one of the weakest reports we have seen in several years.”
Breakdowns b” industry reveal that the wholesale and retail trade sector led the losses, shedding 29,000 jobs in March after a February gain of 51,000. The information, culture, and recreation sector lost 20,000 jobs, while agriculture saw a reduction of 9,300 positions.
However, some gains were recorded in other services, including personal and repair services, which added 12,000 jobs. The utilities sector also added 4,200 positions.
Despite the downturn in employment, total hours worked rose by 0.4 percent in March, following a 1.3 percent drop in February. Average hourly wages increased 3.6 percent year over year.
Bank of Canada Faces Pressure Ahead of Rate Decision
Job losses and rising unemployment pose challenges for the Bank of Canada as it prepares to announce its next interest rate decision on April 16. The current rate stands at 2.75 percent following a recent cut, but economists suggest further reductions may be on the table.
Nguyen believes a weaker labour market and lingering inflation complicate the central bank’s decision-making. “Given how weak the March jobs report is and the looming threat of recession due to the current tariff regime, the Bank of Canada might consider lowering the interest rate to 2.5 percent,” she said.
Po” ter echoed the sentiment, noting that the economic developments over the past two days raise the likelihood of another rate cut.
U.S. Jobs Rise, But Trade Fears Loom
Meanwhile, the U.S. economy showed unexpected strength, with the Labor Department reporting 228,000 new non-farm payroll jobs in March. This followed a revised increase of 117,000 jobs in February, outpacing economists’ forecast of 135,000. However, the unemployment rate in the U.S. edged up to 4.2 percent from 4.1 percent.
Analysts warned that the trade environment remains unstable despite the solid job figures. Businesses are reportedly cautious about hiring due to uncertainties stemming from U.S. President Donald Trump’s aggressive measures, which could lead to job losses shortly.
While current employment numbers offer temporary relief, financial markets remain jittery as fears of a broader economic slowdown grow.
Federal Reserve Chair Jerome Powell acknowledged the contrast between complex data, such as job creation, and softer indicators suggesting a downturn.
“We are closely watching this tension between the hard and soft data,” Powell said. “As the new policies and their likely economic effects become clearer, we will better understand their implications for the economy and monetary policy.”
With both Canadian and global markets reacting to trade policy uncertainty, economists are increasingly bracing for the possibility of a recession in the months ahead.
