OTTAWA β March saw the Canadian economy post its biggest job loss since January 2022 as the uncertainty caused by U.S. tariffs started to take a toll.
Statistics Canada said Friday the economy shed 33,000 jobs in March, while the unemployment rate ticked up to 6.7 per cent compared with 6.6 per cent in February.
RSM Canada economist Tu Nguyen said the result was a glimpse of what may be in store as the trade dispute with the U.S. ramps up and the country faces the possibility of a recession.
"We saw a lot of layoffs happening in trade in March and we expect April to see even more layoffs and a rise in the unemployment rate," she said in an interview.
"Some manufacturing plants, especially in auto production, have already laid off their workers."
The job losses reversed some of the gains made at the end of last year and into January.
Last month, the U.S. imposed tariffs on non-USMCA compliant imports from Canada as well as steel and aluminum imports as tariff threats by U.S. President Donald Trump went through a number of revisions and delays, heaping uncertainty onto businesses.
The U.S. also announced last month sector-specific tariffs on automobile imports that came into effect this week along with wide-ranging tariffs on other countries around the world, prompting concerns about the possibility of a global recession.
Nguyen said Canadian job losses will continue to rack up if the tariffs remain in place, pointing to the decision by Stellantis to pause work for two weeks at its assembly plant in Windsor, Ont., as it assesses the situation as an example of what may be to come.
"The auto sector is so integrated in North America that once you hit one country, you're going to hit everybody," she said.
RBC senior economist Claire Fan said the March jobs report was slightly softer than the bank expected, but the concern is that there is still further weakness to come.
"Moreover, broader U.S. growth risks from much larger tariffs threatened to be imposed on imports from most of the rest of the world would spill over to negatively impact Canada as well," she wrote.
Fan noted Canada lost around 7,000 manufacturing jobs in March.
"Employment in the sector will be watched closely in future jobs reports, for signs of tariffs impacting labour conditions in Canada," she said.
Nguyen said the Bank of Canada is in a difficult position because there is still some underlying inflation.
"But given how weak the March jobs report is and given we are foreseeing a recession given the current tariff rate, I think the Bank of Canada might consider lowering the interest rate to 2.5 per cent," she said.
The current benchmark rate is 2.75 per cent after seven consecutive cuts.
The Bank of Canada's next interest rate decision is set for April 16 when it will also release its latest monetary policy report which will include its updated forecasts for the economy.
Statistics Canada reported 62,000 full-time jobs were lost in the month, partly offset by a gain in part-time employment.
The wholesale and retail trade sector lost 29,000 jobs in March, following an increase of 51,000 in February.
The information, culture and recreation sector lost 20,000 jobs, while the agriculture sector lost 9,300 jobs.
Meanwhile, the βother servicesβ sector, which includes personal and repair services, added 12,000 jobs. Utilities added 4,200 jobs.
Total hours worked were up 0.4 per cent in March, following a drop of 1.3 per cent in February.
Average hourly wages among employees rose 3.6 per cent on a year-over-year basis in March.
This report by The Canadian Press was first published April 4, 2025.
Craig Wong, The Canadian Press
