Tariff uncertainty weighs on hiring as economists warn of more job losses and rising unemployment
Canada experienced its sharpest employment drop in over three years as Statistics Canada reported a loss of 33,000 jobs (–0.2 percent) in March 2025, pushing the unemployment rate to 6.7 percent.
This marks the first increase since November 2024 and the largest decline since January 2022.
According to Statistics Canada, “The employment decline in March was driven by a drop in full-time work (–62,000; –0.4 percent).”
While part-time employment increased, the full-time losses reversed gains made from November 2024 through January 2025, when employment grew by 211,000 jobs (+1 percent).
Private sector employment declined by 48,000 (–0.3 percent), marking a pullback after a cumulative increase of 97,000 jobs from late 2024.
The number of public sector jobs remained stable for the third month in a row, and year-over-year growth reached 92,000 (+2.1 percent).
Self-employment also showed no significant month-over-month change but increased 81,000 (+3 percent) on an annual basis.
The employment downturn emerged as the US escalated trade restrictions.
BNN Bloomberg reported that “the uncertainty caused by US tariffs started to take a toll.”
RSM Canada economist Tu Nguyen warned, “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.”
Nguyen cited auto manufacturing layoffs and said, “The auto sector is so integrated in North America that once you hit one country, you’re going to hit everybody.”
Nguyen added, “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 percent.”
The Bank’s current benchmark rate is 2.75 percent, with its next rate decision due April 16.
The Globe and Mail noted that “the March Labour Force Survey… is the first piece of hard data hinting at the effect of US President Donald Trump’s trade war against Canada.”
Following the data release, markets raised expectations for a rate cut, with a 65 percent probability priced in for April, according to LSEG data.
CIBC economist Andrew Grantham wrote, “The wheels may be starting to come off the Canadian labour market.”
While layoffs remained at typical seasonal levels, Grantham stated that “the concerning recent trend, combined with the likelihood of further weakness ahead as US tariffs start to impact hiring decisions, leans towards further reductions in interest rates from the Bank of Canada.”
The largest industry losses in March occurred in wholesale and retail trade (–29,000; –1 percent), followed by information, culture and recreation (–20,000; –2.4 percent), and agriculture (–9,300; –3.9 percent).
Despite the decline, wholesale and retail employment was little changed year-over-year. Gains were seen in other services (+12,000; +1.5 percent) and utilities (+4,200; +2.8 percent).
Ontario led provincial job losses with a decline of 28,000 jobs (–0.3 percent), primarily in information, culture and recreation (–23,000; –6.2 percent) and business, building and other support services (–13,000; –4.2 percent). The unemployment rate in Ontario rose to 7.5 percent.
Alberta shed 15,000 jobs (–0.6 percent), with the most significant drops in manufacturing (–11,000; –7.5 percent) and wholesale and retail trade (–9,200; –2.5 percent).
Its unemployment rate increased to 7.1 percent. Quebec’s employment remained steady, but its unemployment rate climbed to 5.7 percent as more individuals sought work.
Saskatchewan added 6,600 jobs (+1.1 percent), and its unemployment rate dropped to 4.9 percent, the lowest in the country. Employment in the province was up by 19,000 (+3.1 percent) year-over-year.
The national employment rate fell 0.2 percentage points to 60.9 percent in March. This partially reversed a 0.3 percentage point increase observed from October 2024 to January 2025.
Total hours worked rose 0.4 percent in March, offsetting a 1.3 percent drop in February, with a year-over-year increase of 1.2 percent.
Average hourly wages rose 3.6 percent (+$1.24 to $36.05) on an annual basis in March (not seasonally adjusted), following 3.8 percent growth in February.
Men aged 55 and older experienced a decline of 21,000 jobs (–0.9 percent), bringing total losses for the group to 47,000 (–1.9 percent) in 2025. Their employment rate fell 0.4 percentage points to 38.8 percent.
Employment was stable among core-aged women and youth, but edged down slightly for core-aged men (–16,000; –0.2 percent).
Youth employment was largely unchanged, though their employment rate declined year-over-year—down 1.3 percentage points to 54.6 percent for young women and 1 percentage points to 53.4 percent for young men.
The unemployment rate for women aged 15 to 24 rose by 1.4 percentage points to 13.1 percent as more entered the labour force. Across other major groups, unemployment remained stable.
There were 1.5 million unemployed people in March, up 36,000 (+2.5 percent) over the month and 167,000 (+12.4 percent) year-over-year. Of those unemployed in February, 14.7 percent found work in March, compared to 18.6 percent in March 2024 (not seasonally adjusted).
Long-term unemployment increased to 23.7 percent of the total unemployed population, up from 18.3 percent in March 2024. Those unemployed for 27 weeks or more made up a growing share of the jobless.
Among all unemployed individuals, 44.1 percent had been laid off in the last 12 months, 18.4 percent last worked in construction, and 12.4 percent in wholesale or retail trade.
Another 41.5 percent had not worked in the past 12 months or had never worked—up from 35.4 percent a year earlier. The share who voluntarily left their jobs declined from 17.6 percent to 14.3 percent.
In the territories, employment rates remained above the national average. The Northwest Territories saw a 2.1 percentage point increase in its employment rate to 68.1 percent year-over-year.
Yukon’s rate held steady at 71.8 percent, while Nunavut’s rate was 53.6 percent.
For Inuit in Nunavut, the employment rate was 45 percent, similar to last year and nearly half that of the non-Indigenous population (86.5 percent).
Statistics Canada found that 2.7 million Canadians were self-employed in March, representing 13.1 percent of workers—below the pre-pandemic average of 14.9 percent.
Among self-employed individuals aged 15 to 69, only 43.3 percent had health insurance, 36.4 percent had dental coverage, and 25.3 percent had disability insurance.
By contrast, 67.3 percent of employees had access to health or dental plans and 57.1 percent had disability insurance through their employer.
Incorporated self-employed individuals with employees had the highest coverage, with 49.8 percent having a health plan compared to 39.5 percent of unincorporated self-employed workers without employees.
