Friday’s employment data from Statistics Canada showed a loss of 33,000 jobs in March—the first decline since January 2022—amid rising tariff uncertainty and tensions with the United States. The unemployment rate ticked up to 6.7%, the first increase since November.
The report was released the same day markets tumbled on rising tariff fears, with the TSX shedding nearly 1,000 points and U.S. indexes posting their second straight day of losses.
The job losses came as a surprise to many economists. BMO’s Douglas Porter said the consensus was for job growth to be “about flat,” while Desjardins Senior Economist Laura Gu had expected a modest rebound of 10,000 jobs. Neither forecast materialized.
March’s job losses were driven largely by a decline in full-time positions (-62,000), with wholesale and retail trade (-29,000) and information, culture and recreation (-20,000) among the hardest-hit sectors. The end of the federal GST/HST holiday may have dampened retail hiring. Losses were concentrated in Ontario, Alberta and Quebec, while small gains in other sectors likely reflected a rebound from February’s weather-related disruptions.
Following the release, the Canadian dollar slipped from 0.7064 to 0.7024, while the 5-year bond yield fell from 2.51% to 2.36% at market open before recovering slightly to 2.46%.
“The impact of trade tariffs appears to be working its way through the economy,” wrote TD Economics’ James Orlando, adding, “Businesses and consumers are naturally hesitant in the face of heightened political uncertainty. [Friday]’s report reflects this, with full-time jobs in the cyclically sensitive private sector driving the losses.”
There were a few bright spots: total hours worked rose 0.4% in March after a sharp drop in February, and were up 1.2% year-over-year. Average hourly wages increased 3.6%.
BoC in wait-and-see mode with rate cut odds now a coin toss
As Canadian Mortgage Trends has reported previously, trade war concerns and tariff uncertainty have often outweighed economic data—and that trend appears to be continuing.
Scotiabank’s Derek Holt notes that the latest weak job numbers are not on the BoC’s radar compared to the “shock” of trade wars.
“What will carry the day is that the trade shock is much bigger than anyone anticipated,” he wrote. As a side note, Holt also questioned the accuracy of the March job losses, pointing out that “StatCan applied the lowest seasonal adjustment factor on record for months of March,” which he believes exaggerated the decline.
BMO’s Porter agrees that while the weak jobs report and market selloff are notable, they likely aren’t enough to prompt a rate cut on April 16. Still, he says the latest data will “keep prospects of an April rate cut very much alive.”
However, since Friday’s equity sell-off, market odds of a quarter-point rate cut on April 16 have jumped to 49%, up from 34% the day before, according to market-implied pricing.
Desjardins’ Laura Gu echoed Porter’s view that a rate cut is possible, but said the Bank is likely to adopt a “wait-and-see approach” given the ongoing trade uncertainty—unless market volatility worsens.
TD’s Orlando also sees the decision as “undecided,” but believes a cut is necessary.
“…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,” he said, adding that the latest “discouraging jobs report showcases the downside risks to the economy, which warrants further action from the BoC.”
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Last modified: April 7, 2025
