Canada’s Unemployment Rate Hits 6.9% Amid Tariff Pressures and Sluggish Job Gains

Canada’s labour market showed fresh signs of strain in April as the unemployment rate climbed to 6.9%, its highest level since 2016 outside the pandemic years. The uptick reflects a fragile economic environment rattled by U.S.-imposed tariffs and a cooling employment trend that left nearly 1.6 million Canadians out of work.

New data from Statistics Canada paints a picture of stagnation: job creation in April amounted to a meagre net gain of 7,400 positions, a modest rebound after March’s loss of over 32,000. But the underlying concern is the growing number of Canadians who are unable to re-enter the workforce. Compared to a year ago, unemployment is up by nearly 14%, with 39,000 more people added to the jobless ranks just last month.

“Among those who were unemployed in March, 61% were still out of work in April,” StatsCan reported, underscoring a troubling slowdown in rehiring.

The biggest blow came from the manufacturing sector, which shed 31,000 jobs—a direct consequence of the Trump administration’s tariffs on Canadian steel, aluminum, and automobiles. The uncertainty around ongoing U.S. trade policy continues to weigh heavily on Canadian industry and exports.

While public sector hiring offered a temporary cushion—adding 23,000 jobs, mostly tied to the federal election—the broader labour force remained under pressure. The employment rate dropped to 60.8%, its lowest point in half a year, due in part to slower employment growth failing to match even reduced population increases.

The Bank of Canada is now facing renewed pressure to support the faltering economy. With currency swap markets pricing in a 52% chance of a rate cut in June, central bank officials have signalled readiness to act if inflation stays subdued and the job market continues to weaken.

The Canadian dollar saw a slight lift, trading at 71.88 U.S. cents, while bond yields fell after the release of the labour data—another sign that investors are bracing for monetary policy adjustments.