Update On Canada Jobs Data; TD Economics Says "Discouraging" March Report Warrants Further Action From Bank of Canada

09:28 AM EDT, 04/04/2025 (MT Newswires) -- TD Economics said the impact of trade tariffs appears to be working its way through the economy, with businesses and consumers naturally hesitant in the face of heightened political uncertainty. It noted today's report reflects this, with full-time jobs in the cyclically sensitive private sector driving the losses. "Those that lose their jobs are also taking longer to find work, a sign that the Canadian labour market is starting to loosen in response to the imposition of tariffs," the bank added.

According to TD, the Bank of Canada is "increasingly likely" to cut its policy rate further. TD said while pricing for April is still undecided, it thinks the BoC should keep cutting by at least another 50 bps (cumulative) over the coming months in order to cushion the blow from tariffs. Today's discouraging jobs report showcases the downside risks to the economy, which warrants further action from the BoC, it added.

TD Economics noted the Canadian labour market shed 32.6k positions in March, driven by a decline full-time positions (-62k). Job losses pushed the unemployment rate up 0.1 percentage point (ppt) to 6.7%. The labour force participation rate decreased by 0.1 ppt to 65.2%. Employment by sector showed declines in trade exposed wholesale and retail trade sector (-29k), as well as culture and recreation (-20k). Personal and repair services saw a decent job gain of +12k.

Lastly, total hours worked recovered from a bad weather-induced fall in February (+0.4% on the month, from -1.3%). Meanwhile wages were up a stable 3.6% year-on-year (from 3.8% in February).

CIBC for its part said the wheels may be starting to fall off the Canadian labor market. "Overall," it added, "Friday's LFS report was weaker than expected, although next week's Bank of Canada surveys and global risk sentiment will also be key in determining whether the BoC continues to cut interest rates or elects to skip a meeting later this month, added CIBC.

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