Key points

• Canadian jobs dipped last month, ending a three-month growth streak.   
• This is another sign that the national economy is poised to slow in the third quarter, with re-escalating U.S.-Canada trade tensions creating headwinds. 
• Alberta employment has declined slightly in each of the last two months. While momentum has slowed, the province continues to lead in year-over-year job gains.

National job growth struggling to gain traction

Canadian employment fell 41.7K following a string of three monthly increases. 

Employment is still higher than where it started at the beginning of the year, but not by much.  Last month, employment was sitting 52K above January, a gain of only 0.2%.  

Looking under the hood, the details of the August report were not particularly good. Job losses were concentrated in full-time positions (-36K), and led by a drop in the private sector (-23K). 

The good news? The unemployment rate held steady at 6.4%. But that’s easier to do when the population is barely growing. Indeed, the labour force shrank by 37K last month and is up only 0.4% from last year. In short, fewer jobs, but also fewer job seekers.   

The other positive glimmer came from the beleaguered manufacturing sector, where employment rose 22K. That is much better, but it is still not back to pre-trade war levels. This speaks to resiliency and adaptation to tariff pressures. But that sector faces a new test with 50% tariffs on select products disproportionately hitting manufacturing. 

Keeping with the positive vibes, youth—particularly students who attended school full-time who intend to return to school in the fall—faced a more favourable summer job market than last year. The one asterisk on that is that youth unemployment remained elevated at 12.9% last month. 

Our overall takeaway? Despite earlier signs of life in the labour market, we’re clearly not out of the woods. This report, along with data on retail sales and flat GDP flash estimates for July, reinforces our view that Canada’s economy will slow in Q3. Revived trade tensions add further headwinds, and elevated energy-price-induced inflation will take a bite out of consumer spending. 

After a hot start to the year, Alberta employment cools off in the summer

Alberta employment had a strong first half to the year, but it has slipped in each of the last two months.* Our view from our June forecast was that employment would indeed level off, though last month came in weaker than we expected (yet our jobs forecast remains on track).

Last month’s 8.9K employment loss in Alberta comes on the heels of a similar pullback (-7.3K) in July. The decline was split fairly evenly between full-time and part-time positions, and concentrated in public sector positions (-12.6K).

One month doesn’t make a trend, and perhaps two months doesn’t either. But it’s fair to say that the Alberta labour market has cooled recently after a strong start to the year.

Taking a longer view, Alberta continues to lead all provinces in year-over-year job growth. The reason for this is that the province kept churning out jobs in the early innings of 2026 amid national job losses. That has helped lift today’s level of jobs well above last year. As such, employment sits at 92.4K, or 3.6%, higher than in August 2025—far outpacing the 1% national gain. On a year-to-date basis, Alberta is up 3.5% compared to the Jan-Aug 2025 period versus 0.6% nationally. 

There was some progress on the provincial unemployment rate, which fell from 7% to 6.8% due to fewer job seekers—yet it is still higher than the 6.4% national average. 

Alberta’s labour market in the last couple of years has been characterized by the ‘more jobs, but even more people’ trend. Even with nation-leading job gains, the Alberta economy has struggled to put a dent in its unemployment rate as more people enter the labour force looking for work.  

We’re seeing some early signs of labour market rebalancing, as slower population growth eases pressure on jobless readings. We expect that trend to continue with Alberta’s annual unemployment rate falling from 6.7% in 2026 to 6.3% next year. 

A curious trend, which we can’t quite wrap our heads around, is that employment in Alberta’s oil and gas and mining sector hasn’t gained much traction. It ticked up last month versus July, but is up only 1% from August 2025. We believe that this category will pick up in the coming months. 

Another reason for the Bank of Canada to keep holding on

This week the Bank of Canada kept its finger on the pause button at 2.25%. We think they’ll keep it there longer, at least until the end of the year. It’s true that inflation is running too high right now (and the Bank said this week that inflation risks have increased), but this report reinforces that Canada’s economy is still too fragile for rate hikes.