Canada’s economy took an unexpected hit on the job market in April, while unemployment also crept up, raising concerns about the strength of the economy ahead of the Bank of Canada’s rate decision next month.
Statistics Canada’s labour force survey released on Friday said the economy shed 18,000 jobs in April, following an increase of 14,000 jobs in March.
The loss came as the unemployment rate rose to 6.9 per cent compared with 6.7 per cent in March, returning to where it was in October last year, largely because more people were looking for work.
Economists had expected the economy to add jobs for the month and the unemployment rate to hold steady.
“If you look at the drivers of that increase in the unemployment rate, in particular for April, it was not driven by permanent layoffs, so that’s kind of the good news,” RBC assistant chief economist Nathan Janzen said.
“What drove the unemployment rate higher, a lot of it was people quitting their current job to look for a new one.”
While Janzen said it isn’t a good indication that people aren’t immediately able to find a new job, it does signal confidence in the labour market that people are willing to quit their jobs in search for another.
The Bank of Canada held its overnight lending rate at 2.25 per cent last month — its fourth consecutive hold after back-to-back quarter-point drops in September and October of last year.
The central bank said it was closely monitoring the impact of the Middle East war and how the economy continues to respond to U.S. tariffs and trade policy uncertainty.
In a note to clients Friday, TD senior economist Andrew Hencic said given the soft jobs report and the limited ability for companies to pass on inflation shock price increases to consumers, he expects the Bank of Canada to continue to hold this year, if the sharp rise in oil prices begins to reverse in the coming weeks.
Earlier this week, the head of the International Energy Agency warned the global energy crisis from the war in Iran will hit Canadians soon.
Fatih Birol said it’s the worst energy crisis the world had ever seen. And while Canada has been somewhat insulated from the full effect of the price shocks so far, he warned that would soon change.
“If Canada’s future or current customers are economically weak, their ability and appetite to buy energy or other things will be weaker,” Birol said in Ottawa on Tuesday.
Adding to the concerns surrounding Canada’s economy is the uncertainty around the trade agreement between Canada, the United States and Mexico that is up for a mandatory review this year.
While Canada added 67,000 more jobs on a year-over-year basis, the country has lost 112,000 jobs since January, mostly in the manufacturing and wholesale sectors.
The last time Canada lost so many jobs in a four-month window was from October 2020 to January 2021 — during the pandemic. In non-pandemic times, you’d have to go back to 2009, when Canada lost 241,000 jobs in a four-month span.
BMO chief economist Doug Porter said there’s no debate that the first couple months of the year have been challenging.
“Maybe the best way to look at this is, what’s happened over the last 12 months and what we’ve seen is very little job growth,” Porter said.
“Overall employment is up 0.3 per cent. That’s next to no job growth whatsoever, when you think about the fact that there’s over 20 million people employed in the country.”
Janzen also pointed to the “unprecedented” slowdown in Canada’s population growth as a factor in the soft employment growth.
“In that kind of a backdrop, you would expect to see less employment growth,” Janzen said.
Ontario added 42,000 jobs in April, largely in health care and social assistance, but that was offset by a loss of 43,000 jobs in Quebec in the wholesale and retail trade sectors.
Statistics Canada also said on Friday that average hourly wages were up 4.5 per cent from a year ago.
This report by The Canadian Press was first published May 8, 2026.
— With files from Kelly Geraldine Malone in Washington
By Nick Murray | Copyright 2026, The Canadian Press. All rights reserved.