Canadian equity markets had another sharp decline on Friday, resulting in total losses of more than 8% over the final two days of last week. This came on the heels of the US imposing retaliatory and automobile tariffs, which are expected to slow global economic activity. While exempted from retaliatory tariffs, Canada still faces tariffs in several key industries that are likely to weigh on economic conditions. The US is preparing to raise the tariff on Canadian lumber to 34%. Signs are emerging that the labour market might be beginning to weaken.

• Statistics Canada reported that the Canadian economy lost 32,600 jobs in March. This marked the first month of job losses since July 2024, and the largest number of losses since January 2022. Full-time employment declined in March, which offset gains made in the part-time sector.
• Significant job losses were seen in the wholesale and retail trade industry, which shed 29,000 jobs over the month. The culture and recreation industry also posted a significant number of job losses over the month. Conversely, the personal and repair services industry added jobs.
• Canada’s unemployment rate edged higher to 6.7% in March from 6.6% in the previous month. The number of unemployed persons increased, while the labour force participation rate ticked lower.
• Data from the US continued to show relative strength. The economy added 228,000 jobs over the month. The unemployment rate increased to 4.2%.
• The Bank of Canada released its Business Outlook Survey yesterday. Business sentiment is falling. Businesses are concerned about future sales and have halted plans for investment and hiring.

Canada’s economy is expected to weaken amid US tariffs. March’s labour market data might be the first sign of slowing economic conditions. International equity markets fell sharply again yesterday. Canadian equities also declined. While losses have been larger than normal in recent days, equity markets have always experienced periods of volatility but have eventually recovered and advanced over the long term.

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