In April 2025, Canada’s unemployment rate climbed to 6.9%, up from 6.7% in March, marking the highest jobless rate in over three years. This exceeded market forecasts of 6.8% and reflects the growing strain on businesses, particularly from U.S.-imposed tariffs targeting critical sectors like aluminum, steel, and autos.
The number of unemployed individuals surged by 39,300, bringing the total to 1,548,100. At the same time, net employment rose slightly by 7,500 jobs, beating expectations of just 2,500. This modest rebound helped recoup most of the 32,600 jobs lost in March.
However, the manufacturing sector bore the brunt of the economic pressure, shedding 31,000 jobs. This steep decline highlights how deeply international trade tensions are affecting Canadian industry. Interestingly, the labor force still grew, pushing the labor force participation rate up by 0.1 percentage points to 65.3%, suggesting that more Canadians are either working or actively looking for work.
What This Means for the Bank of Canada’s June Rate Decision
The latest labor data adds complexity to the Bank of Canada’s decision-making process. While the headline unemployment rate rising to 6.9% signals economic slack and weakening labor market momentum, the slight uptick in employment and participation rates shows continued engagement in the job market.
The central bank is likely to view this data as supportive of a potential rate cut in June, especially given the deterioration in manufacturing employment and growing evidence that high interest rates, combined with external trade pressures, are beginning to bite. The rise in unemployment above expectations could tip the scales toward monetary easing as the BoC aims to protect against a broader economic slowdown.
How This Could Impact the Vancouver Housing Market
If the Bank of Canada proceeds with a rate cut in June, mortgage rates could begin to fall, offering a tailwind to the Vancouver housing market. Lower borrowing costs would likely revive buyer interest, particularly among first-time homebuyers who have been sidelined by affordability constraints and high financing costs.
However, the rise in unemployment—especially if it becomes a trend—could temper demand in the short term, as consumer confidence may weaken and income insecurity grows. But in a market like Vancouver, where housing inventory remains relatively tight, a rate cut could stoke renewed competition and price pressure, especially in entry-level and mid-tier properties.
The rise in unemployment is a warning sign, but the labor market’s resilience and participation growth suggest the economy isn’t falling off a cliff. If the Bank of Canada cuts rates in June, it could provide relief to households and support to the housing market, especially in high-demand areas like Vancouver. Watch closely for BoC signals in the coming weeks—this data gives them room to pivot.
