A third monthly job loss in four months pushes unemployment to a six-month high
Canada's labour market served up another disappointing report Friday, as the country shed 17,700 jobs in April. The national unemployment rate also climbed to 6.9%, its highest level since last October, according to Statistics Canada.
The figures landed well below consensus expectations of a 10,000-job gain and deepened concerns about an economy caught between the lingering drag of US tariffs and fresh inflationary pressure from a Middle East conflict that has pushed oil prices sharply higher.
For mortgage professionals tracking the Bank of Canada's path, the central bank has now held its policy rate at 2.25% for the fourth consecutive time, and the latest jobs data does little to change that calculus ahead of its next scheduled decision on June 10.
Read more: Bank of Canada right to hold, says C.D. Howe Institute
A labour market that can't find its footing
The headline number masked a deterioration that runs deeper than a single bad month. Canadian employment has fallen by 111,000 full-time positions since the start of the year, and youth unemployment has climbed back up to 14.3%.
The broad sectoral picture offered scant comfort: all goods-producing sectors reported job losses, with construction shedding 15,700 positions and the resource sector dropping 5,500. Manufacturing has now shed a net 60,000 jobs since the start of 2025.
A notable wrinkle in April's data was the source of the unemployment rate's rise. Rather than a wave of layoffs, the increase was driven by more people entering the workforce than the economy could absorb.
TD Economics' Andrew Hencic noted that the labour force expanded by 33,500 in the month, pushing the participation rate up 0.1 percentage point to 65.0%, and that the monthly layoff rate of 0.6% remained in line with pre-pandemic averages — a sign of labour market stress more than outright collapse.
Read more: RBC sees Canada’s jobs engine steady even as labour pool thins
On the services side, health care and social services added 17,500 jobs and management and administrative roles gained 21,500, while culture, information and recreation saw a notable decline of 24,800 positions.
The regional picture was uneven. Quebec accounted for a drop of 43,000 jobs in April. That's nearly the entire national decline, with that province also bearing most of the cumulative loss of 112,000 positions recorded across Canada this year.
Ontario offered a partial offset, adding 42,400 jobs, driven largely by a jump in health care employment.
Quebec's unemployment rate rose eight-tenths of a percentage point to 6.2%, matching its 2025 peak, while Manitoba saw its jobless rate fall to 5.0%, the lowest in the country.
Wage growth remained elevated but showed signs of easing. Average hourly wages dipped slightly to 4.5% year-over-year, though the fixed-weight measure, which strips out compositional shifts, showed much more subdued growth of 3.4%, more consistent with other measures of underlying wage pressure.
Economists push back on rate hike bets
Despite financial markets having priced in the possibility of a rate hike later this year, the April jobs data has prompted economists at Canada's major banks to push back firmly against that narrative.
CIBC's Andrew Grantham was among the most direct, arguing that the continued softness in the labour market undermines the case for the Bank of Canada to respond to the oil price shock with tighter policy. With ample slack in the labour market, the risk that core inflation accelerates meaningfully appears limited, and CIBC continues to forecast no change in interest rates throughout 2026.
Sal Guatieri of BMO Capital Markets notes the Bank of Canada is likely to stay on hold as trade tensions and oil-driven inflation risks continue to evolve.https://t.co/n8oLZczkC4
— Canadian Mortgage Professional Magazine (@CMPmagazine) April 30, 2026
BMO chief economist Douglas Porter, whose team graded the April report a failing 26.4 out of 100, was equally pointed in his assessment of rate hike expectations.
"It's incredibly tough to see the logic behind the market's pricing of more than one rate hike later this year, when the economy is struggling mightily to take even one step forward," Porter said.
"Even with the big slowdown in population growth, slack appears to be re-building in the job market, which should help keep a lid on any secondary inflation pressures from the oil shock."
TD's Hencic arrived at a similar conclusion from a different angle. In his view, the persistently elevated unemployment rate reflects a job market that continues to struggle to absorb labour supply, and the ongoing slack meaningfully limits firms' ability to pass on cost increases from the oil price shock to consumers.
"This is a key factor that underpins our view that if the sharp rise in oil prices begins to reverse in the coming weeks, the Bank of Canada will be able to stay on hold this year," he argued.
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