Canada Unemployment Rate 2025 Hits 6.9%: Manufacturing and Retail Jobs Take a Major Hit

Canada unemployment rate 2025 has reached a troubling 6.9%, reflecting rising economic uncertainty. In April alone, the Canadian economy added just 7,400 jobs—far below expectations. This weak performance highlights deepening cracks in the labor market, with the manufacturing and retail sectors among the hardest hit.
As domestic demand slows and international trade pressures mount, analysts warn of further disruptions ahead. This article explores what’s fueling the spike in the Canada unemployment rate 2025, why certain industries are more vulnerable, and what this means for workers and employers across the country.

Manufacturing Sector Faces Severe Downturn with 31,000 Jobs Lost

The manufacturing industry has been hit particularly hard, shedding 31,000 jobs in April alone. While these losses span various manufacturing subsectors, automotive manufacturing appears especially vulnerable due to recent trade tensions and tariff measures.

“The job losses are fairly spread between different manufacturing sectors, but automotive was definitely one sector that could expect to see more damages or job losses in the coming months,” explains Clara Fan, Senior Economist with RBC. This vulnerability stems from concentrated and targeted tariff measures that have disproportionately affected certain regions.

Windsor, Ontario serves as a stark example of this impact, with its unemployment rate now exceeding 10% – significantly higher than the national average. The region’s heavy reliance on automotive manufacturing makes it particularly susceptible to trade disruptions and tariff-related challenges.

Trade Tensions: Understanding Canada’s Position in the Current Climate

Despite ongoing concerns about trade relations, Canada appears to be in a somewhat better position compared to other U.S. trading partners. “When it comes to broader tariff measures, we’re actually lucky. Canada is currently facing the least amount of tariffs among U.S. trading partners,” notes Fan.

This relative advantage may help buffer some sectors of the Canadian economy, particularly:

• Service industries
• Resource-based provincial economies
• Manufacturing sectors not directly targeted by trade measures

However, certain regions and industries will continue to experience disproportionate impacts, especially those closely tied to affected manufacturing supply chains or consumer discretionary spending.

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Retail and Wholesale Sectors Also Struggling with 27,000 Jobs Lost

Beyond manufacturing, the retail and wholesale sectors shed 27,000 jobs in April. Unlike manufacturing losses, which appear more directly linked to trade tensions, retail job declines stem from broader economic factors:

• Weakening consumer spending
• Declining consumer confidence
• Housing market cooling
• Cautious consumer behavior

“That has more to do with just a sentiment hit as we’ve seen in the consumer confidence data,” explains Fan. “Consumer confidence dropped quite substantially in March and has been rebounding a little bit in April.”

Interestingly, actual retail sales data shows more resilience than consumer sentiment metrics would suggest. While sales have been contracting moderately, the decline hasn’t been as severe as sentiment indicators might predict. This suggests that consumer behavior remains somewhat stable despite growing economic concerns.

Key Factors Affecting Retail Employment:

1. Housing market activity cooling substantially
2. Regional economic disparities
3. Shift in consumer spending priorities
4. Cautious business hiring practices

Will Job Losses Spread to Other Sectors?

A critical question facing the Canadian economy is whether these job losses will remain contained or spread to other sectors. The current trade shock appears limited in scope, primarily affecting manufacturing and related transportation sectors. However, broader domestic demand is also contracting, which could potentially impact other industries.

“That is where this very limited trade shock to the Canadian economy could really spread to impacts on other sectors,” warns Fan. “Retail and spending are not looking exactly great, but they’re not contracting by 5% or anything severe – they’re contracting by about 0.3% over the past months we’ve been tracking.”

If trade tensions escalate, the impacts could extend beyond manufacturing to affect:

• Food and dining establishments
• Service industries
• Consumer discretionary businesses
• Regional economies dependent on affected sectors

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Public Administration Employment Boost May Mask True Job Market Weakness

The April employment report showed an increase in public administration jobs, likely related to temporary hiring for the upcoming federal election. When these temporary positions are excluded from the data, the employment picture looks considerably worse.

“If you account for some of the jobs in the temporary jobs related to public administration tied to the federal election, we’re actually seeing job losses in April,” clarifies Fan.

This suggests that the underlying job market may be weaker than headline numbers indicate, with private sector employment declining while temporary government positions temporarily boost the overall figures.

The Path Forward: What to Expect in Coming Months

As Canada navigates these economic challenges, several factors will determine the trajectory of the job market:

1. Trade policy developments – Any de-escalation in trade tensions could provide relief, particularly for manufacturing
2. Consumer confidence recovery – Improved sentiment could boost retail and service sector employment
3. Regional economic diversification – Areas heavily dependent on affected industries may need to adapt
4. Monetary policy adjustments – Central bank responses to economic conditions will influence business investment and hiring

While the April employment report raises concerns, it’s important to note that economic conditions remain fluid. The coming months will provide clearer indications of whether these job losses represent a temporary adjustment or the beginning of a more prolonged economic challenge.

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FAQ About Canadian Unemployment Trends in 2025