Canada’s Job Market Shocker: 66,000 Jobs Lost in August as Unemployment Hits 7.1%

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In a surprising blow to Canada’s economy, August 2025 saw a sharp drop of 66,000 jobs, extending a troubling trend that started in July. The employment rate dipped to 60.5%, while the unemployment rate climbed to 7.1%—the highest in nearly a decade outside pandemic-era lows. What’s behind this sudden job market downturn and what does it mean for Canadian workers?

Core-Age Workers Face Sharp Employment Declines

The labour market loss was most pronounced among core-aged workers between 25 and 54 years old. Men saw employment reduce by 58,000 (-0.8%), while women experienced a 35,000 (-0.5%) loss, contributing heavily to the overall job deficit. These demographic falls mark the lowest employment rates for core-aged men since 2017 and the lowest for core-aged women since 2018.

Industry-Wise Job Losses and Growth

August’s employment declines were concentrated in key sectors:

• Professional, scientific, and technical services fell by 26,000 workers (-1.3%) after several stable months despite a year-over-year increase.
• Transportation and warehousing dropped sharply by 23,000 jobs (-2.1%), offsetting gains from previous months.
• Manufacturing lost 19,000 positions (-1.0%), declining notably since its peak earlier in 2025.

Conversely, construction added 17,000 new jobs (+1.1%), the first growth since early 2025, buoyed by infrastructure investments.

Provincial Employment Trends

Provincially, Ontario, British Columbia, and Alberta endured the most significant employment losses:

• Ontario shed 26,000 jobs, reflecting broader economic uncertainty and tariff-related trade pressures.
• British Columbia lost 16,000 jobs, mainly impacting core-aged men.
• Alberta faced a 14,000 job decline, particularly affecting manufacturing and retail sectors.

Meanwhile, provinces like New Brunswick and Prince Edward Island showed resilience, with either minor declines or gains in employment.

Employment Takes a Hit — Part-Time Jobs Plunge

The job losses in August were mostly among part-time workers, who saw a staggering decline of 60,000 positions. Full-time employment held steady but only after taking a hit in July. Core-aged workers—those between 25 and 54 years old—bore the brunt of the downturn. Men lost 58,000 jobs (-0.8%) and women dropped 35,000 (-0.5%), pushing employment rates for both groups to the lowest since 2017 and 2018, respectively.

Meanwhile, youth employment (ages 15 to 24) and older workers (55+) remained relatively steady, though challenges persist for young Canadians entering the workforce amid fierce competition.

Key Industries Feeling the Pinch

Several crucial industries faced sharp employment drops:

• Professional, Scientific, and Technical Services: Lost 26,000 jobs (-1.3%) after months of stagnation
• Transportation and Warehousing: Dropped 23,000 jobs (-2.1%), reversing July’s gains
• Manufacturing: Shed 19,000 jobs (-1.0%), continuing a year-long decline from a peak in January 2025

In a rare bright spot, construction added 17,000 jobs (+1.1%), offsetting previous setbacks but not enough to reverse the overall negative trend.

Regional Impact: Ontario, B.C., Alberta Hit Hardest

Three provinces experienced the sharpest employment declines:

• Ontario lost 26,000 jobs (-0.3%) and remains down 66,000 from its February 2025 peak
• British Columbia’s workforce shrunk by 16,000 (-0.5%), mostly men aged 25-54
• Alberta dropped 14,000 jobs (-0.6%), with layoffs hitting manufacturing and retail sectors hardest

Unemployment rates rose in all three provinces, posing tough challenges for local economies still recovering from pandemic disruptions.

Rising Unemployment and a Tough Job Market for Students

Canada’s unemployment rate increased 0.2 points to 7.1%, marking a half-point rise since January 2025 and the highest figure since May 2016. The number of unemployed Canadians grew by 34,000, as layoffs edged higher and job seekers faced mounting difficulty finding new roles. Only 15.2% of those unemployed in July secured work by August, compared to over 23% in pre-pandemic years.

For students returning for the fall term, the summer job market remained grim. The unemployment rate among returning students hit 17.9%, the highest since 2009 (excluding 2020’s pandemic spike), with young men more affected than women.

Hidden Struggles: Underemployment and Multiple Jobholding

Beyond unemployment, nearly 9% of workers wanted more hours but couldn’t get them, with part-time workers disproportionately affected. Many underemployed workers face lower hourly wages and work fewer hours than they desire—often to cover essential expenses or save for big purchases.

Job stress also contributed to workers wanting fewer hours, especially in accommodation, finance, health care, and social assistance sectors.

Meanwhile, 5.4% of Canadians held multiple jobs in August 2025, many out of financial necessity, signaling ongoing earnings challenges despite being employed.

What’s Next for Canada’s Labour Market?

The August data reveals a cooling labour market reflected in job losses, rising unemployment, and wage pressures. Tariff tensions and global uncertainties may have dampened hiring and investment, particularly in trade-sensitive industries. While construction shows some resilience, Canada’s economy faces questions about how swiftly it can rebound.

Workers struggling to find full-time employment or adequate hours signal broader economic challenges that could influence policy decisions—especially the Bank of Canada’s future interest rate moves.

Summary:

• Canada lost 66,000 jobs in August 2025, mainly in part-time work
• Unemployment rose to 7.1%, highest since 2016
• Core-aged men and women faced the biggest employment declines
• Professional services, transportation, and manufacturing suffered losses; construction grew
• Ontario, B.C., and Alberta saw the largest job declines
• Youth and returning students face a tough job market
• Underemployment and multiple jobs signal financial strain for many workers

Canada’s labour market faces uncertainty, and many Canadians are feeling the pinch. The coming months will be critical in shaping the economic road ahead.

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