Canadian Employment (March 2025)

Canada sheds jobs in March as tariffs issue their first blow

• The Canadian labour market shed 32.6k positions in March, driven by a decline full-time positions (-62k). 
• Job losses pushed the unemployment rate up 0.1 percentage point (ppt) to 6.7%. The labour force participation rate decreased by 0.1 ppt to 65.2%.
• Employment by sector showed declines in trade exposed wholesale and retail trade sector (-29k), as well as culture and recreation (-20k). Personal and repair services saw a decent job gain of +12k.
• Lastly, total hours worked recovered from a bad weather-induced fall in February (+0.4% on the month, from -1.3%). Meanwhile wages were up a stable 3.6% year-on-year (from 3.8% in February).                

Key Implications

• Has it begun? The impact of trade tariffs appears to be working its way through the economy. Businesses and consumers are naturally hesitant in the face of heightened political uncertainty. Today's report reflects this, with full-time jobs in the cyclically sensitive private sector driving the losses. Those that lose their jobs are also taking longer to find work, a sign that the Canadian labour market is starting to loosen in response to the imposition of tariffs.
• The Bank of Canada is increasingly likely to cut its policy rate further. While pricing for April is still undecided, we think the bank should keep cutting by at least another 50 bps (cumulative) over the coming months in order to cushion the blow from tariffs. Today's discouraging jobs report showcases the downside risks to the economy, which warrants further action from the BoC. 

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