By Robb M. Stewart

OTTAWA--Canada shed jobs in March, pushing the unemployment rate higher at a time when businesses are increasingly wary of the fallout from the Trump administration's approach to trade and its embrace of tariffs.

Employers in the country cut 32,600 jobs in February, Statistics Canada said Friday. With the labor market expanding only slightly for the month, this meant the unemployment rate ticked up to 6.7%, representing the first rise in four months after the rate held at 6.6% in the first two months of the year.

Economists were expecting employment to rise by a modest 10,000 jobs after just 1,100 jobs were added to the economy the month before.

Households in Canada have grown worried about job security in recent months, and some businesses are setting aside hiring plans as they brace for a slump in demand and higher prices after President Trump's launch of import tariffs and Canada's retaliation with counter-levies.

The pullback in employment comes after three months of strong hiring through January, when the outlook for Canada's economy appeared on solid footing and inflation looked to be under control.

The losses in March were in full-time work, which dropped by 62,000 during the month and countered a rise in part-time roles. The brunt was felt in the private sector following little change in February, while employment in the public sector was little changed for a third straight month.

While a small number of jobs were lost last summer during a soft patch for the labor market, the March drop in employment is the first significant decline since the start of 2022 during the pandemic. Those jobs, which were lost with the rise of a new Covid-19 variant, were quickly recovered the next month.

The latest data offer the last signals from the job market that the Bank of Canada will see before its policy meeting April 16, when economists widely expect interest rates to be held steady after cuts at each meeting since last June have made it the most aggressive Group of Seven central bank in its efforts to stimulate growth after taming inflation.

There are signs unemployed Canadians are facing a tougher time finding work. There were roughly 1.5 million unemployed in March, up 2.5% for the month and 12.4% higher than a year earlier. Long-term joblessness, the proportion of people searching for work for 27 weeks or more, stood at 23.7% in the latest month against 18.3% in March 2024.

When calculated using U.S. Labor Department methodology, Canada's unemployment rate in March was 0.1 percentage point higher at 5.7%.

Business surveys in Canada--including the central bank's most recent, released last month, when it again lowered its benchmark interest rate--show increasing unease over the threat tariffs pose and a scaling-back of investment and hiring plans by many companies.

There are fears that important sectors for the country, such as auto manufacturing, could pull back as tariffs dampen spending plans and push up prices. Chrysler and Dodge parent Stellantis this week said it would idle its minivan plant in Windsor, Ontario, for two weeks, a day after the White House's tariff aimed at imported vehicles went into effect.

In March, there were fewer Canadians employed in wholesale and retail, offsetting a jump in February. And after five months of little change, employment dropped in information, culture and recreation. There was a fall in the number of agriculture jobs, as well.

Canada's employment rate, the proportion of the worker-age population that is employed, slipped 0.2 points to 60.9% in March to partially offset a 0.3 point rise seen between October and January.

Wage growth also cooled for the month, with average hourly wages for permanent employees rising 3.5% on a year earlier after a 4% advance the month before.

Still, hours worked rose 0.4% sequentially in March after a decline of 1.3% in February. Compared with a year earlier, hours worked rose 1.2%.

After months of continuously changing tariff threats, the White House in early March imposed 25% tariffs on many goods imported from Canada and Mexico. A 25% levy on all imports of steel and aluminum, much of which come from Canada, kicked in March 12, and this week a 25% tariff on global automobile imports came into effect even as Trump widened his net with sweeping tariffs targeting countries around the world.

Canada relies heavily on the U.S. to buy crude oil, lumber and metals, and industries such as automotive manufacturing are tightly integrated between the two countries. Prime Minister Mark Carney, the former head of the Bank of Canada and the Bank of England, on Thursday warned Trump's latest tariff drive risks the U.S. falling into recession, saying it would be difficult for Canada to avoid a similar fate.

Write to Robb M. Stewart robb.stewart@wsj.com

(END) Dow Jones Newswires

April 04, 2025 09:05 ET (13:05 GMT)

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