Overall employment changed little in April (+7,400; +0.0%), following a decline in March (-33,000; -0.2%) and virtually no change in February.

Following a decline of 0.2 percentage points in March, the employment rate—the proportion of the population aged 15 and older—fell a further 0.1 percentage points in April. This increased the employment rate to 60.8%, matching a recent low in October 2024.

The employment rate trended down for most of 2023 and 2024, as population growth outpaced employment gains. More recently, it increased for three consecutive months from November 2024 to January 2025, driven by strong employment gains amid slower population growth.

Public sector employment increased by 23,000 (+0.5%) in April, following three consecutive months of little change. This growth was associated with temporary hiring for the federal election.

The number of private-sector employees was little changed in April, following a decline in March (-48,000; -0.3%). Self-employment was little changed for a third consecutive month in April.

The number of unemployed people—those looking for work or on temporary layoff—increased by 39,000 (+2.6%) in April and was up by 189,000 (+13.9%) year over year.
Unemployed people faced more difficulties finding work in April than a year earlier. Among those unemployed in March, 61.0% remained unemployed in April, higher than the corresponding proportion for the same months in 2024 (57.3%) (not seasonally adjusted).

The share of workers being laid off may increase during periods of economic downturn or disruption. Among those employed in March 2025, 0.7% had become unemployed in April due to a layoff. This proportion changed little from the same period in 2024 (0.6%) (not seasonally adjusted).

There were more people in the labour force in April, and the participation rate—the proportion of the population aged 15 and older who were employed or looking for work—increased by 0.1 percentage points to 65.3%. Despite the increase in the month, the participation rate was down 0.4 percentage points on a year-over-year basis.

Average hourly wages among employees increased 3.4% (+$1.20 to $36.13) year-over-year in April, following growth of 3.6% in March (not seasonally adjusted).

Wholesale and retail trade employment declined by 27,000 (-0.9%) in April, following a similarly sized decline in March (-29,000; -1.0%). The decline over the two months offset the substantial gain recorded in February. On a year-over-year basis, wholesale and retail trade employment changed little in April.

Chart 3 
Employment down in manufacturing in April

In finance, insurance, real estate, rental and leasing, employment increased by 24,000 (+1.6%) in April, continuing an upward trend from October 2024, with cumulative gains during this period totalling 67,000 (+4.7%).

Statistics Canada assessed the proportion of employees anticipating layoffs. Not surprisingly, employees in industries dependent on US demand for Canadian exports were more likely to anticipate layoffs. Job insecurity causes people to tighten their belts.

April is the third month in a row that the Canadian economy has seen very little change in employment or job losses, underscoring a slowdown in hiring or downsizing amid trade uncertainty. It’s also the first month that the tariff impact on export-dependent jobs in auto, steel, aluminum, and other sectors becomes more evident.

Ontario, the country’s factory heartland, saw the steepest plunge in this industry among the provinces. In Windsor, the auto industry hub, the unemployment rate jumped 1.4 percentage points to 10.7%, the highest among 20 of Canada’s largest metropolitan areas.

Traders in overnight swaps upped their bets for a rate cut at the Bank of Canada’s next decision on June 4, putting the odds at just over a coin flip after the release.

Overall, the economy’s weakness continues to pull inflation down. However, price pressures in shelter and some other services are holding inflation up. Since the July Monetary Policy Report, the upward forces from prices for shelter and some other services have eased slightly. At the same time, the downward pressure from excess supply in the economy remains.

Tiff Macklem said today, “If inflation continues to ease broadly in line with the central bank’s July forecast, it is reasonable to expect further cuts in the policy rate. We will continue to assess the opposing forces on inflation and take our monetary policy decisions one at a time.”

The economy grew by 2.1% in the second quarter, led by government spending and business investment. This was slightly stronger than forecast in July. Together with the first quarter’s growth of 1.8%, the economy grew by about 2% over the first half of 2024. That’s a healthy rebound from our near-zero growth in the second half of 2023. The Bank’s July projection has growth strengthening further in the second half of this year. Recent indicators suggest there is some downside risk to this pickup. In particular, preliminary indicators suggest that economic activity was soft through June and July, and employment growth has stalled in recent months.

That makes this Friday’s Labour Force Survey data for August particularly important. We expect economic activity to slow in the third quarter to rough 1.3%, keeping the Bank in an easing posture through next year.

The unemployment rate has risen over the last year to 6.4% in June and July. The rise is concentrated in youth and newcomers to Canada, who find it more challenging to get a job. Business layoffs remain moderate, but hiring has been weak. The slack in the labour market is expected to slow wage growth, which remains elevated relative to productivity.

Turning to price pressures, CPI inflation eased further to 2.5% in July, and the central bank’s preferred measures of core inflation also moved lower. With the share of CPI components growing above 3% around its historical norm, there is little evidence of broad-based price pressures. But shelter price inflation is still too high. Despite some early signs of easing, it remains the most significant contributor to overall inflation. Inflation remains elevated in some other services but has declined sharply in manufacturing and goods prices.

As outlined in the Bank of Canada’s Monetary Policy Report, inflation is expected to ease further in the months ahead. It may bump up later in the year as base-year effects unwind, and there is a risk that the upward forces on inflation could be more potent than expected. At the same time, with inflation getting closer to the target, the central bank must increasingly guard against the risk that the economy is too weak and inflation falls too much. Judging from comments made at today’s press conference, the BoC is at least as concerned about too much disinflation–taking the economy into a deflationary spiral.

Macklem said, “We are determined to bring inflation down to the 2% target and keep it there. We care as much about inflation being below the target as we do about it being above it. The economy functions well when inflation is around 2%.”

With continued easing in broad inflationary pressures, the Governing Council reduced the policy interest rate by 25 basis points. Excess supply in the economy continues to put downward pressure on inflation, while price increases in shelter and some other services are holding inflation up. The Governing Council is carefully assessing these opposing forces on inflation. “Monetary policy decisions will be guided by incoming information and our assessment of their implications for the inflation outlook. The Bank remains resolute in its commitment to restoring price stability for Canadians”.