Canada sheds 18,000 jobs in April as private sector employment slides for fourth straight month

Canada's labour market continued to weaken in April, with the economy shedding 18,000 jobs and the unemployment rate climbing to 6.9 per cent, Statistics Canada confirmed in revised data circulated to economists on Thursday. The new figures sharpen a months-long pattern in which private sector employment has fallen for four consecutive months while public sector hiring has slowed, leaving the country with 112,000 fewer private payroll positions than at the start of the year.

The April Labour Force Survey, originally released last Friday, has been picked apart by economists and by Bay Street rates desks all week. Thursday's commentary, building on the revised seasonal adjustments and on the regional breakdowns released earlier in the day, paints a picture of an economy that is being pulled in two directions. On one side, U.S. tariffs are squeezing exporters in central Canada. On the other side, federal hiring restraint is choking the public sector contribution to job growth that had previously offset weakness in goods-producing industries.

The result is what the Bank of Canada has been describing for months as a soft landing in motion. Inflation remains close to target, growth is positive but slowing, and the labour market is loosening rather than collapsing. Whether the Bank views the latest data as a vindication of its patient policy stance or as a signal to cut rates again at its June 10 meeting is one of the most contested questions on Canadian rates desks heading into the weekend.

What the April numbers show

Total employment fell by 18,000 in April, or 0.1 per cent, with the employment rate slipping 0.1 percentage points to 60.5 per cent. The unemployment rate rose 0.2 percentage points to 6.9 per cent as more Canadians searched for work. The participation rate ticked up, suggesting that the rise in unemployment is being driven in part by people re-entering the labour force rather than by widespread layoffs.

The composition of the change matters. Full-time employment fell by 47,000 in April, while part-time employment edged up by 29,000. Over the first four months of 2026, full-time work is down 111,000 positions while part-time has held roughly flat. That mix is consistent with employers responding to demand softness by cutting hours and shifting toward more flexible forms of labour, rather than by mass layoffs.

Manufacturing was the single hardest-hit industry, with employment in the sector down nearly 30,000 over the first four months of the year. Wholesale and retail trade also softened. Public administration employment fell modestly as a federal hiring freeze worked through the system. The bright spots were in health care and social assistance, which continued to add positions, and in construction, which has stabilised after a difficult winter.

The tariff overhang

The labour data cannot be read in isolation from the broader economic context, and the most consequential variable is the tariff regime now in place between Canada and the United States. President Donald Trump's metal tariff structure, finalised in April, applies a flat 50 per cent rate to articles made entirely or almost entirely of aluminum, steel, or copper, and a 25 per cent rate on derivative articles substantially made from those metals. Canadian counter-tariffs apply to roughly 15.6 billion dollars in U.S. steel and aluminum imports.

The cumulative impact of those measures has been substantial. Economists estimate that the 2025-2026 tariff cycle has already reduced Canadian GDP by between 1.5 and 2 per cent, and Canadian households are absorbing an estimated 1,700 to 2,000 dollars in higher annual costs. Federal Industry Minister Melanie Joly announced earlier this month that the Business Development Bank of Canada will administer a one-billion-dollar loan programme for steel, aluminum, and copper firms most affected by the tariff regime, in part to keep payrolls intact while companies wait for trade negotiations to produce a result.

Ontario and Quebec, the two provinces most exposed to manufacturing payrolls, bore most of the April employment decline. Atlantic Canada also softened. Alberta and Saskatchewan held up better, supported by continued investment in upstream oil and gas. British Columbia was roughly flat.

What the Bank of Canada will be watching

The Bank of Canada held its overnight rate at 2.25 per cent at its April 29 meeting, after a series of cuts that brought policy from its 2024 peak into clearly accommodative territory. Governor Tiff Macklem's accompanying statement signalled that the Bank expects inflation to return to target early next year, that growth will recover modestly through 2027, and that any further policy adjustments are likely to be small.

Thursday's labour figures will not have surprised the Bank, which has been projecting a soft labour market through this year as the tariff shock works through the manufacturing sector. The key question is whether the four-month run of private sector job losses tips the balance toward a June cut. Rates futures markets are pricing in roughly a 60 per cent probability of a 25-basis-point cut on June 10, slightly above where they were before the April employment report.

Bay Street economists are divided. The view at major Canadian banks ranges from a clear call for a June cut, backed by the manufacturing employment data and the soft GDP track, to a hold-and-watch stance grounded in the still-elevated services inflation print. The Bank's next decision will rest on the May Labour Force Survey, due June 6, and on whether inflation continues to track toward target.

What it means for households

For Canadian households, the April data confirm that the labour market is no longer the supportive force it was through much of 2024 and early 2025. Job searches are taking longer, wage growth has slowed, and the share of unemployed Canadians who have been out of work for more than 27 weeks is now at its highest level since the pandemic recovery. That combination tends to translate into reduced consumer spending, particularly on discretionary categories, and to put downward pressure on housing demand at the margin.

Mortgage holders facing renewals will see some relief if the Bank of Canada cuts again. Variable rate borrowers, whose payments adjust immediately, would benefit most directly. Fixed rate borrowers will not see relief until renewal, but bond yields have already fallen in anticipation, pulling five-year fixed mortgage rates down toward the high three-per-cent range at major lenders.

The federal Affordable Power Guarantee announced as part of Wednesday's National Electricity Agenda is also designed to backstop low-income households through any further volatility in energy costs. Its details remain to be tabled, but the intent signalled by the prime minister is to limit the spillover from energy-related price shocks into broader cost-of-living strain.

The political stakes

For the Carney government, the April jobs numbers are an early test of the prime minister's central campaign promise to manage the tariff shock without letting it metastasise into a wider downturn. Carney's economic team has framed the policy mix as one of targeted support for tariff-exposed industries, structural investment through the electricity and projects framework, and patience on the monetary side.

Conservative leader Pierre Poilievre seized on the data Thursday afternoon, accusing the government of presiding over the worst run of private sector job losses outside a recession in two decades. The Conservatives have been pressing the prime minister on the question of whether tariff retaliation has done more damage to Canadian payrolls than to the U.S. economy, and the April numbers give them new material.

The New Democrats called for immediate expansion of employment insurance eligibility and for a stronger sectoral support programme aimed at manufacturing communities. The Bloc Québécois pressed the federal government to ensure that the Quebec aerospace and aluminum sectors are not left out of any new tariff-relief package.

Regional and sectoral picture

The regional breakdown of the April data is sharply uneven. Ontario lost roughly 9,000 jobs, concentrated in manufacturing and wholesale trade. Quebec lost about 6,000, with aluminum-exposed Saguenay and the broader manufacturing belt taking the brunt. Atlantic Canada lost roughly 2,000 jobs, while Alberta and Saskatchewan added a small number of positions each.

Sectoral employment in finance, insurance, and real estate fell modestly, reversing a string of monthly gains. Information and culture employment fell slightly. Accommodation and food services held up better than expected, possibly buoyed by a strong domestic tourism shoulder season.

Public sector employment overall ticked down by a few thousand, reflecting federal restraint. Provincial governments and municipalities continued to hire, particularly in health care, but at a slower pace than in 2025.

What's next

The Bank of Canada's June 10 rate decision is the next major data point, followed by the May Labour Force Survey on June 6 and the May Consumer Price Index later in June. The federal government is expected to table its fall economic statement in the coming weeks, which will include updated fiscal projections and revised assumptions on growth and employment.

Watch for continued attention to manufacturing payrolls, particularly in southern Ontario and along the Quebec aluminum corridor. The federal BDC loan programme is expected to begin disbursing money in early June, which may slow the rate of job losses in the most affected firms. Trade talks between Ottawa and Washington remain stalled at the technical level, with no breakthrough in sight on either the metal tariffs or the broader CUSMA review window that opens later this year.

For the Bank of Canada, the question is no longer whether the economy is slowing. It is whether the slowdown is converging on something close to the projected soft landing or whether the cumulative effect of tariffs and federal fiscal restraint is producing something more uncomfortable. Thursday's data did not resolve that question. The June numbers may.