Canada sees drop in total jobs in March for first time in over three years, unemployment rate up

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 percent from 6.6 percent 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 percent.

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.

US President Donald Trump imposed a 25 percent tariff on Canadian steel and aluminium from March and slapped import duties on cars and parts based on non-US 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 CAD= was trading down 0.72 percent to 1.4194 to the US dollar, or 70.45 US cents, after China imposed retaliatory tariffs on the United States.

Currency markets are betting that there is a 62 percent chance of yet another rate cut by the Bank of Canada on April 16, a sharp turn from just a 25 percent chance seen a day earlier. 0#CADIRPR

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 labour 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 percent had lost their job due to a layoff within the previous 12 months. Of these, 18.4 percent last worked in construction, while 12.4 percent 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 percent, 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 percent in March from 4 percent in February.