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Canada shed 33,000 jobs in March, the worst month for the labour market in three years, as the threat of U.S. tariffs weighed on business confidence and slowed hiring.

Job declines were widespread across industries, and concentrated in full-time positions and private sector employment, Statistics Canada reported Friday. The unemployment rate ticked up to 6.7 per cent from 6.6 per cent in February. Bay Street analysts had expected a small increase in employment.

The March Labour Force Survey, conducted from March 9 to 15, is the first piece of hard data showing the effect of U.S. President Donald Trump’s trade war against Canada.

It’s too early to see a direct impact of U.S. tariffs, which were imposed throughout March and early April on Canadian goods that don’t comply with the United States-Mexico-Canada Agreement, as well as on steel, aluminum and automobiles. However, the threat of tariffs has shaken Canadian consumer and business confidence, which appears to be weighing on the labour market.

Following the publication of the data, financial markets upped their bets on another interest rate cut from the Bank of Canada at its next meeting on April 16. Traders now put the odds of another quarter-point cut at around 65 per cent, much higher than in recent weeks, according to LSEG data. Another cut would take the central bank’s policy rate to 2.5 per cent.

“The wheels may be starting to come off the Canadian labour market,” Andrew Grantham, Canadian Imperial Bank of Commerce senior economist, wrote in a note to clients. He noted that Canada’s job market had been fairly solid through the second half of last year and into January.

“However, the concerning recent trend, combined with the likelihood of further weakness ahead as US tariffs start to impact hiring decisions, leans towards further reductions in interest rates from the Bank of Canada, although the timing will depend on next week’s business and consumer surveys as well as global risk sentiment,” Mr. Grantham wrote.

Statscan said layoff rates from February to March were in line with typical levels for that time of year, suggesting the weakness was more the result of slower hiring and normal attrition than outright layoffs.

The Canadian numbers stood in contrast to U.S. jobs data, also released Friday. U.S. employers added 228,000 new positions in March, well ahead of Wall Street expectations of 140,000. Although earlier payroll figures for January and February were revised down by 48,000.

This suggests that the U.S. labour market was in relatively good shape as Mr. Trump embarked on his protectionist push to remake the global trading system. But that could change quickly.

Mr. Trump’s decision to impose sweeping tariffs on America’s trading partners this week has tanked financial markets and raised the odds of a recession. On Friday, China retaliated against the U.S. with a 34-per-cent duty on all U.S. goods, raising the prospect of spiralling global trade war.

“It’s an historical footnote on the economy that was before ruinous trade wars erupted,” Derek Holt, head of capital markets economics at Bank of Nova Scotia wrote in a note to clients about the U.S. jobs numbers.

In Canada, the Statscan data showed an unequal impact across provinces. Ontario lost around 28,000 jobs and the unemployment rate ticked up two notches to 7.5 per cent. Alberta and Quebec lost around 15,000 and 5,000 jobs respectively. Saskatchewan was the outlier, adding around 6,000 jobs, while employment remained fairly flat in most other provinces.

The wholesale and retail sector lost 29,000 jobs while the information, culture and recreation sector lost 20,000. Employment fell by a smaller amount in business support services, agriculture, manufacturing and construction. This was partially offset by increases in several sectors, including “other services” and transportation and warehousing.

“While US tariffs will be the obvious culprit for the fall in employment in March, two-thirds of the decline was concentrated in the services sector, suggesting that other factors were at play,” Bradley Saunders, North America economist at Capital Economics wrote in a note to clients.

“Nonetheless, the broad-based weakness in last month’s Labour Force Survey does not bode well for the outlook, especially with timely surveys showing firms’ hiring intentions falling sharply.”

Total hours worked rose 0.4 per cent following a 1.3 per cent decline in February – one of the few bright spots in the data. Average hourly wages were up 3.6 per cent year-over-year compared to 3.8 per cent in February.

Private sector employment in the U.S. increased by more than expected in the month of March, according to a report released by payroll processor ADP on Wednesday.

ADP said private sector employment jumped by 155,000 jobs in March after climbing by an upwardly revised 84,000 jobs in February.

Economists had expected private sector employment to grow by 105,000 jobs compared to the addition of 77,000 jobs originally reported for the previous month.

“Despite policy uncertainty and downbeat consumers, the bottom line is this: The March topline number was a good one for the economy and employers of all sizes, if not necessarily all sectors,” said ADP chief economist Nela Richardson.

The report said the manufacturing sector delivered stronger-than-average job gains for the second straight month, adding 21,000 jobs.

Meanwhile, ADP said construction hiring slowed, while the natural resources and trade, transportation, and utilities sectors lost jobs.

ADP also said year-over-year pay gains slowed to 4.6 percent for job-stayers and to 6.5 percent for job-changers. The1.9 percentage point pay premium for job-changers matches a series low last seen in September.

On Friday, the Labor Department is scheduled to release its more closely watched report on employment in the month of March, which includes both public and private sector jobs.

Economists currently expect employment to increase by 140,000 jobs in March after climbing by 151,000 jobs in February. The unemployment rate is expected to remain unchanged at 4.1 percent.

A report released by the Energy Information Administration on Wednesday unexpectedly showed a sharp increase by U.S. crude oil inventories in the week ended March 28th.

The EIA said crude oil inventories surged by 6.2 million barrels last week after slumping by 3.3 million barrels in the previous week. Economists had expected crude oil inventories to decrease by 2.0 million barrels.

Nonetheless, at 439.8 million barrels, U.S. crude oil inventories remain about 4 percent below the five-year average for this time of year, the report said.

The report also said distillate fuel inventories, which include heating oil and diesel, crept up by 0.3 million barrels last week but are about 6 percent below the five-year average for this time of year.

Meanwhile, the EIA said gasoline inventories decreased by 1.6 million barrels last week but remain 2 percent above the five-year average for this time of year.

The price of crude moved to the downside during trading on Tuesday, giving back ground after surging to its highest closing level over a month on Monday.

After spiking $2.12 or 3.1 percent to $71.48 a barrel in the previous session, crude for May delivery fell $0.38 or 0.5 percent to $71.10 a barrel.

The pullback by the price of crude oil came as traders await U.S. President Donald Trump’s reciprocal tariffs announcement on April 2 to assess the impact on fuel demand.

A report from the Washington Post this morning said White House aides have drafted a proposal to impose tariffs of around 20 percent on most imports to the U.S.

However, the Washington Post noted White House advisers cautioned that several options are on the table and no final decision has been made.

Concerns over tighter global supply also remained in focus after Trump threatened Russia with tariffs and vowed to continue strikes on Yemen’s Houthi rebels until they no longer pose a threat to global shipping.

He also issued a stern warning to Iran, stating that the “real pain is yet to come.”

Iran’s Supreme Leader Ayatollah Ali Khamenei warned the U.S. would receive a strong blow if it acted on Trump’s threat to bomb unless Tehran reaches a new nuclear deal with Washington.

After moving sharply higher over the past few sessions, the price of gold showed a modest move back to the downside during trading on Tuesday.

Gold for April delivery edged down $3.90 or 0.1 percent to $3,118.90, snapping a three-session winning streak and pulling back off the record closing high set in Monday’s session.

The modest pullback may have reflected profit taking following the recent surge, although selling pressure was relatively subdued amid lingering concerns about President Donald Trump’s trade policies ahead of the announcement of reciprocal tariffs on Wednesday.

“On Wednesday, it will be Liberation Day in America, as President Trump has so proudly dubbed it,” White House press secretary Karoline Leavitt said.

“The President will be announcing a tariff plan that will roll back the unfair trade practices that have been ripping off our country for decades,” she added. “He’s doing this in the best interest of the American worker.”

A report from the Washington Post this morning said White House aides have drafted a proposal to impose tariffs of around 20 percent on most imports to the U.S.

However, the Washington Post noted White House advisers cautioned that several options are on the table and no final decision has been made.

In U.S. economic news, a report from the Institute for Supply Management showed activity in the U.S. manufacturing sector contracted in March after two consecutive months of expansion.

The ISM said its manufacturing PMI dipped to 49.0 in March from 50.3 in February, with a reading below 50 indicating contraction. Economists had expected the index to edge down to 49.5.

Euro area inflation eased in March largely due to a slowdown in the services costs growth and strengthened the calls for further interest rate cuts from the European Central Bank.

The harmonized index of consumer prices rose 2.2 percent year-on-year in March, which was slightly slower than the 2.3 percent rise in February, flash data from Eurostat showed on Tuesday. The rate matched expectations.

Core inflation that excludes prices of food, alcohol and tobacco, slowed to 2.4 percent from 2.6 percent in the previous month. Inflation was expected to slow marginally to 2.5 percent.

Data showed that growth in food prices increased to 2.9 percent from 2.7 percent. Meanwhile, prices of energy fell 0.7 percent, reversing February’s 0.2 percent gain.

Services costs rose at a slower pace of 3.4 percent after a 3.7 percent increase. At the same time, growth in non-energy industrial goods prices held steady at 0.6 percent.

On a monthly basis, the HICP logged an increase of 0.6 percent in March. Final data is due on April 16.

The recent data support the view that the ECB will cut interest rates by 25 basis points again later this month, Capital Economics economist Jack Allen-Reynolds said.

In March, the ECB cut interest rates for a fifth policy session in a row and lowered the deposit rate by 25 basis points to 2.5 percent, which is its lowest level since February 2023. The bank had signaled a pause in the easing cycle as policy was deemed less restrictive.

Germany’s harmonized inflation eased to 2.3 percent in March from 2.6 percent in February and French inflation held steady at 0.9 percent. Spain’s inflation fell to a five-month low of 2.2 percent in March.

On the other hand, Italy’s inflation accelerated to 2.1 percent from 1.7 percent.

Separate official data showed that the euro area unemployment rate dropped to 6.1 percent from 6.2 percent in January. In the same period last year, the rate was 6.5 percent.

Unemployment decreased by 70,000 from the prior month. The number of people out of work totaled 10.580 million.

The youth unemployment rate climbed to 14.2 percent in February from 14.1 percent in the previous month.

Activity in the U.S. manufacturing sector contracted in March after two consecutive months of expansion, according to a report released by the Institute for Supply Management on Tuesday.

The ISM said its manufacturing PMI dipped to 49.0 in March from 50.3 in February, with a reading below 50 indicating contraction. Economists had expected the index to edge down to 49.5.

The modest decrease by the headline index partly reflected an accelerated contraction by new orders, as the new orders index slid to 45.2 in March from 48.6 in February.

“Orders continue to slow, as discussions about who will pay for potential tariff costs are the prime topic of negotiations between buyers and sellers,” said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee.

The report also showed a downturn by production, with the production index falling to 48.3 in March from 50.7 in February.

The employment index also declined to 44.7 in March from 47.6 in February, suggesting employment in the manufacturing sector decreased for the second consecutive month.

Meanwhile, the ISM said the prices index jumped to 69.4 in March from 62.4 in February, indicating a notable acceleration by the pace of price growth.

The Institute for Supply Management is scheduled to release a separate report on U.S. service sector activity in the month of March on Thursday.

The services PMI is currently expected to edge down to 53.0 in March after inching up to 53.5 in February, but a reading above 50 would still indicate growth.

Job opening in the U.S. fell by more than expected in the month of February, the Labor Department revealed in a report released on Tuesday.

The Labor Department said job openings dipped to 7.568 million in February from an upwardly revised 7.762 million in January.

Economists had expected job openings to slip to 7.630 million from the 7.740 million originally reported for the previous month.

The report said hires crept up to 5.396 million in February from 5.371 million in January, while total separations edged down to 5.261 million in February from 5.272 million in January.

Within separations, quits fell to 3.195 million in February from 3.256 million in January but layoffs rose to 1.790 million in February from 1.674 million in January.

OPEC+ ministers from eight nations that are gradually raising oil output will meet online on Thursday and are likely to approve a further hike in production from May, sources from the producer group told Reuters.

Eight members of OPEC+, a group that includes the Organization of the Petroleum Exporting Countries and allies led by Russia, are scheduled to raise oil output by 135,000 barrels per day in May.

That would be the second monthly increase under a plan to unwind some of the millions of barrels per day of cuts the group has had in place since 2022.

OPEC+ is simultaneously pressuring other producers that have exceeded their output targets to rein in output and pump below target for a time to compensate.

Two of the OPEC+ sources said the meeting was to review plans for some members to make additional output cuts to compensate for pumping above their quotas.

Two others said the group’s plan to continue to unwind their most recent layer of oil output cuts was expected to remain unchanged for May.

All sources declined to be identified by name due to the sensitivity of the matter. OPEC did not immediately reply to a Reuters request for comment.

OPEC+ has been cutting output by 5.85 million bpd, equal to about 5.7 per cent of global supply. The group has agreed on a series of steps since 2022 to support the market.

An OPEC+ ministerial committee, with the power to recommend to the larger group changes in production policy, was earlier scheduled to meet on April 5 although one source said this may also take place on Thursday.