The Canadian economy shed a shocking 66,000 jobs in August, steamrolling estimates for a gain of 5,000, which has ramped up bets that the

Bank of Canada will restart interest rate cuts. Market bets that policymakers will cut interest rates from their current 2.75 per cent at their Sept. 17 meeting jumped on Friday to a bit more than 70 per cent from 55 per cent the day before as the

unemployment rate rose to 7.1 per cent from 6.9 per cent in July, according to the latest Labour Force Survey.

The economy also lost 41,000 positions in July and has now shed a net 38,500 positions for the first eight months of the year and it’s not all due to United States tariffs being imposed.

“The weakening of the Canadian labour market in recent months hasn’t solely been driven by sectors most sensitive to U.S.

tariffs , suggesting that the Bank of Canada needs to recommence interest rate cuts to stimulate demand and hiring within the economy more broadly,” Andrew Grantham, an economist at CIBC Capital Markets, said in a note. “We continue to forecast a September cut and a further reduction in Q4.”

Significant job losses were recorded in tariff-sensitive industries, including manufacturing and transportation and warehousing, where jobs fell 19,200 and 22,700, respectively. But job losses were also recorded in professional and technical services and education, though the latter is typically volatile.

“The upshot is that a September cut from the Bank of Canada looks almost nailed on, with the prospect of another cut before the end of the year looking increasingly likely too,” Alexandra Brown, a North America economist at Capital Economics Ltd., said in a note.

However, other economists aren’t convinced that the job numbers are enough to push the Bank of Canada over the line to cut

interest rates . “All told, this weak report fully reinforces any bias for the (Bank of Canada) to ease somewhat further here, but

inflation hasn’t quite given them the all-clear,” Douglas Porter, chief economist at BMO Capital Markets, said in a note.

The Bank of Canada’s mandate is to keep inflation as close to its two per cent target as possible. One of the ways it does that is by adjusting interest rates.

Overall inflation is currently 1.7 per cent year over, but the core inflation measures that the Bank of Canada tracks more closely have come in hotter, with core median and trim inflation each registering 2.4 per cent on a three-month average.

Charles St-Arnaud, chief economist at Alberta Central, said we should expect more job losses in the next few months as “sectors affected by the U.S. tariffs are likely to continue to struggle” and the slack in the Canadian economy continues to build up.

“A greater amount of slack in the economy than expected raises the likelihood of a cut in September, but a cut may still hinge on the next (consumer price index) release,” he said in a note.

The next inflation release comes out on Sept. 16. “Any signs of easing in inflation would mean a rate cut in September, even if core inflation remains around three per cent,” St-Arnaud said. “But an upside surprise to inflation could delay it.”

 Sign up here to get Posthaste delivered straight to your inbox.

Canada’s unemployment rate jumped to 7.1 per cent in August, the highest jobless rate in over nine years outside of the pandemic, raising bets that the Bank of Canada would cut its interest rate this month.

The Canadian economy lost 66,000 jobs during the month, mostly in part-time work, with professional and technical services leading the declines, Statistics Canada said on Friday. Trade-sensitive sectors such as transportation and warehousing and manufacturing also recorded significant drops in employment. — Jordan Gowling, Financial Post

  • Today’s Data: Bloomberg Nanos confidence index for Canada
  • Earnings: Major Drilling Group International, The North West Co.inc.
  • ‘We are in the clean-up phase’: Why this REIT CEO keeps buying malls amid a wider real estate recovery
  • Capitalism for big firms, risk for everyone else: Why the investment landscape needs a reset
  • Not in my backyard: Industry and housing collide in Canada’s push to build

Read the full story here. This reader is “way, way behind the eight ball” in terms or her retirement portfolio. She does own her own home, but she has a small, “conservative” registered retirement savings plan and is worried that in order to retire she needs a “huge number.” FP Answers offers this woman four obvious places to start to get herself unstuck and ease her stress.

Read more here. Are you worried about having enough for retirement? Do you need to adjust your portfolio? Are you starting out or making a change and wondering how to build wealth? Are you trying to make ends meet? Drop us a line at

wealth@postmedia.com with your contact info and the gist of your problem and we’ll find some experts to help you out while writing a Family Finance story about it (we’ll keep your name out of it, of course).

McLister on mortgages

Want to learn more about mortgages? Mortgage strategist Robert McLister’s

Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Plus, check out his

Financial Post on YouTube

mortgage rate page for Canada’s lowest national mortgage rates, updated daily. Visit the Financial Post’s YouTube channel for interviews with Canada’s leading experts in business, economics, housing, the energy sector and more.

Today’s Posthaste was written by Gigi Suhanic with additional reporting from Financial Post staff, Canadian Press and Bloomberg.

Have a story idea, pitch, embargoed report or a suggestion for this newsletter? Email us at

  • What’s behind gold’s record-breaking rise, and how high could it go?
  • Housing market is so good for buyers right now, you can sell first and buy later

posthaste@postmedia.com . Bookmark our website and support our journalism: Don’t miss the business news you need to know — add financialpost.com to your bookmarks and sign up for our newsletters here