The Canadian labor market faced challenges in February due to harsh winter weather and the looming threat of tariffs from both the United States and China. The economy added only 1,100 jobs, a stark decline from the 76,000 jobs added in January, well below economists' expectations. In particular, Nova Scotia experienced significant job losses, shedding 4,300 jobs, which pushed the unemployment rate up by 0.7 percentage points to 6.6 percent, consistent with the national average.
Regionally, Quebec reported the lowest unemployment rate at 5.3 percent, while Newfoundland and Labrador had the highest at 10.5 percent. In Nova Scotia, men aged 25 and older were the most adversely affected, with an increase of 1.4 percent in unemployment compared to January. Conversely, the unemployment rate among women in the same age group rose by 0.7 percent. Interestingly, the unemployment rate for individuals of any gender aged 15 to 24 dropped from 13 percent in January to 11.9 percent in February.
Nova Scotia's economy is heavily reliant on the service sector, which has been severely affected by job losses nationwide. The manufacturing industry saw a decline of 4.8 percent, the utilities sector decreased by 7.8 percent, and transportation and warehousing experienced a staggering 23 percent drop. Notably, all job losses in the province were concentrated in part-time employment.
Despite these challenging conditions, the broader Canadian economy has demonstrated resilience. Brendon Bernard, a senior economist at Indeed, remarked that the stability in the unemployment rate indicates that Canadian employers have not engaged in widespread layoffs in anticipation of tariffs. He expressed cautious optimism about the job market despite potential challenges ahead.
James Orlando, a TD Bank economist, identified harsh winter weather as a probable reason for the weaker labor market performance in February, but he also noted that fears surrounding the impending tariffs might be influencing the data. He emphasized that the Canadian labor market entered this tariff crisis with a solid foundation, which is crucial given the significant challenges facing the economy.
On a positive note, Nova Scotia is expected to experience the smallest impacts from U.S. tariffs, according to a report from the Conference Board of Canada. This research highlighted that the province possesses a fairly advantageous industry mix and sends the lowest proportion of its exports to the U.S. among Canadian provinces. Notably, the economy is not heavily dependent on international exports, with services accounting for a significant 81 percent of the provincial GDP and only 11 percent deriving from international goods exports.
However, uncertainty looms over the fishing industry, which remains heavily reliant on American processors. This sector's future may be precarious in light of ongoing trade tensions. Overall, while Nova Scotia faces immediate challenges in terms of employment and sector performance, it maintains some resilience against potential economic shocks from tariff-related disruptions.
