09:03 AM EDT, 04/07/2025 (MT Newswires) -- Canada's Labour Force Survey for March brought a contractionary 33,000 job loss, against the consensus of 10,000 gains, said Rosenberg Research after Friday's LFS data.

Private sector employment fell by 48,000 and full-time employment fell by a "shocking" 62,000. Hourly wages were up just 3.6% year over year for all employees and were up 3.5% for permanent employees, versus the +4.1% year-over-year consensus. After modest wage numbers for January and February, this reinforces the disinflationary wage trend, noted Rosenberg Research.

These are huge downside misses in both jobs and wages -- confirming that the United States tariff shock is hitting "hard," stated Rosenberg. For Q1 2025 as a whole, this was Canada's slowest pace of wage growth since Q1 2022.

The unemployment rate rose to 6.7% while the consensus was at 6.7%. Rosenberg uses 5.7% as the benchmark for a neutral unemployment rate, so the economy is moving further into disinflationary excess labor supply. The full-time (-62,000) versus part-time (+30,000) split in job losses/job gains suggests further weakness under the hood.

The market pricing suggests an expected -3.1 cuts (-77 basis points) of easing by the end of the year -- up from just -65bps priced in before the report hit, it added. Last month's LFS showed a weak report of just 1,000 job gains and a steady unemployment rate, at 6.6%.

One of Rosenberg's key takeaways from last month was that strength in some subsectors was reflecting temporary activity from exports ahead of possible tariffs. This month, the weakness spread from the goods sector (-12,000) to the service sector (-21,000) too. Accommodation/food services (-2,000) and retail/wholesale trade (-29,000) remained weak.

Manufacturing (-7,000) and Agriculture (-9,000) are both key export sectors that will be hit hard by the tariffs. Transportation and warehousing (+10,000) is likely still enjoying some pre-tariff activity that will dissipate in the April report, pointed out Rosenberg. This also suggests that the degree of loonie depreciation hasn't yet been sufficient.

The construction sector (-4,000) and finance, insurance, and real estate (+6,000) are interest rate sensitive and had a middling month. All of this reinforces Rosenberg's view that the Bank of Canada is slightly behind the curve. The current rate is 2.75%, which is the BoC's own estimate of a neutral rate -- hardly appropriate for an economy with excess labor supply on the brink of recession.

With the recent pop in the Canadian dollar (CAD or loonie) from Canada's possibly temporary avoidance of higher tariffs, this represents a good opportunity to re-enter tactical short positions, according to Rosenberg. The structural pressures for a weaker loonie remain strong, and a lower U.S. growth outlook and falling global commodity prices only reinforce that view.

Rosenberg's revised forecasts for Canada show a massive hit to GDP, even though the USMCA exemption spares the country from the worst of President Donald Trump's tariffs. This is because Canada can't avoid the spillover effects of a slowdown in U.S. and global growth or the bearish implications of lower commodity prices.

Rosenberg expects unemployment to rise both this year and next year if the U.S. persists with its growth-crushing tariff policy, as Canada's GDP growth will remain well below potential.