But they cannot be sure that the BoC will want to continue rate cuts just yet
The Canadian economy lost 33,000 jobs last month, but economists are warning that the loosening of the labour market could only be just getting started.
Statistics Canada’s data for March shows that unemployment ticked up to 6.7% and while this was only up 0.1% from the previous month, it was the first decrease since November 2024 when it peaked at 6.9% having risen from just 5% in March 2023.
But the figures also reveal the worsening picture, especially for young people looking for work who are finding it takes longer to do so, while the share of all ages groups who are long-term unemployed (27 weeks or more) was near 24% in March this year compared to near 18% a year earlier.
Employment was down the most among the wholesale and retail trade (-29,000; -1.0%) and information, culture and recreation (-20,000; -2.4%) sectors, and entirely in Ontario and Alberta.
With many small businesses feeling the squeeze of worsening conditions, potential closures is a key risk to the Canadian labour market.
Although President Trump’s latest tariff proclamation did not include Canada due to the existing trade agreement, those that were already announced, along with a general sense of uncertainty and concern around Canada’s trading relationship with the US, is likely to be biting already.
Dominique Lapointe, senior director of Macro Strategy for Manulife Investment Management, told WP in a statement that the tariffs on non-USMCA compliant goods are set to continue to hurt labour market conditions.
“For now, businesses are adapting, along with targeted support from governments. It remains to be seen how long exporters can hold on facing either reduced demand or lower margins. We therefore expect more job losses in the coming months,” he said.
RBC economist Nathan Janzen noted that, even without direct tariffs on Canada, the growth risks for the US economy and other trading partners will have an impact on the domestic economy.
While RBC does not expect a dramatic slashing of interest rates by the Bank of Canada to shore up the economy, its economics team is predicting a rate cut this month.
TD Economics also believes the BoC will need to respond in the coming months.
“While pricing for April is still undecided, we think the bank should keep cutting by at least another 50 bps (cumulative) over the coming months in order to cushion the blow from tariffs. [The] discouraging jobs report showcases the downside risks to the economy, which warrants further action from the BoC,” wrote senior economist James Orlando.
But Laura Gu, senior economist at Desjardins, is not convinced that the BoC will make a cut on April 16.
“Economic uncertainty will likely dampen economic growth in the coming quarters and lead to continued job losses,” she said. “Given the ongoing trade policy uncertainty south of the border, the Bank of Canada is likely to adopt a wait-and-see approach at its upcoming meeting on April 16, unless the current market selloff persists.
