- September 4, 2025
- Posted by: Melanie Scott
- Category: Market News
The latest U.S. data points to a cooling labour market, showing that ADP non-farm employment rose by 54,000 in August, falling short of expectations for a 73,000 increase and well below July’s 106,000 gain. Hiring has slowed under the weight of import tariffs and stricter immigration policies, with the government reporting that in July there were more unemployed workers than job openings for the first time since the pandemic. Weekly unemployment claims also ticked higher, rising to 237,000 from 229,000 the week before, exceeding expectations of 230,000.
Despite the softer labour picture, the services sector is showing resilience. The ISM Services PMI expanded for a third consecutive month, climbing to 52.0 in August from 50.1 in July, signaling modest but steady growth in U.S. service activity. Meanwhile, trade tensions remain in focus. After the U.S. Court of Appeals ruled that Trump’s reciprocal and fentanyl-related tariffs were illegal, the former president is now seeking support from the Supreme Court to uphold them. The tariffs will remain in place until at least October 14 as the appeal process unfolds.
In Canada, the merchandise trade deficit narrowed to C$4.94 billion in July from C$5.98 billion the prior month, driven by stronger exports of crude oil and passenger cars to the U.S. However, the fiscal outlook remains strained. Prime Minister Carney stated on Wednesday that October’s main budget will prioritize austerity and targeted investments, admitting current government spending is unsustainable. Economists remain skeptical of Carney’s pledge to balance the budget within three years, given rising defense costs, weaker tariff revenues, the cancellation of the digital services tax and other tax relief measures.
Oil prices dropped nearly 3% yesterday and remain under pressure today following reports that OPEC+ may consider increasing supply at its meeting this weekend.
Looking ahead, attention turns to tomorrow’s jobs data. In Canada, employment is expected to rebound with a forecasted 9,300 job gain in August after July’s 40,800 decline, while the unemployment rate is projected to increase marginally from 6.9% to 7.0%. In the U.S., the Bureau of Labor Statistics’ report is anticipated to confirm a softening labour market, with average hourly earnings seen rising 0.3% month over month and the unemployment rate edging higher to 4.3%.
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