(Bloomberg) -- Canada’s job market unexpectedly took a breather after months of steady growth, but the unemployment rate held steady as fewer people looked for work.

Employment was virtually unchanged in February, with just 1,100 positions added, keeping the jobless rate at 6.6% for a second straight month, Statistics Canada reported Friday. Economists in a Bloomberg survey expected 20,000 jobs to be added and unemployment rate to rise by 0.1 percentage points.

February’s minuscule jobs numbers are a stark contrast from a wave of robust gains between November and January that totaled 211,000, which is the largest since early 2023.

With a combination of emerging weakness and US President Donald Trump’s on-again, off-again tariff approach still casting a cloud of uncertainty over the Canadian economy and its ability to trade with its biggest customer, the Bank of Canada is expected to cut its policy rate for the seventh straight meeting on March 12.

The loonie briefly dipped to the day’s low against the US dollar and traded at $1.4337 as of 8:35 a.m. in Ottawa after the concurrent release of similarly soft US jobs figures. Canada’s two-year yield slipped around three basis points to 2.60%, tracking a broader move lower in developed market yields.

Following the releases, traders in overnight swaps increased bets that the Bank of Canada would trim borrowing costs by another 25 basis points next week, boosting the odds to 85% from about three-quarters previously.

In the US, nonfarm payrolls increased 151,000, slightly lower than expectations for a 160,000 gain, and the unemployment rate edged higher, illustrating a labor market that’s cooling only gradually in the face of rising economic uncertainty.

Just three days after the US imposed steep levies on Canada and Canada retaliated in kind, Trump paused tariffs on products that are compliant with the US-Mexico-Canada free trade agreement until April 2, when he’s set to announce another round of tariffs with trading partners globally.

Economists and markets largely expect policymakers to reduce borrowing costs to brace the economy for the impact of a tariff war that will plunge demand for exports, force job losses and reduce consumer demand and business investment.

“Hiring stalled during February, in what could be the first sign that tariff uncertainty is impacting the Canadian economy,”Andrew Grantham, economist at Canadian Imperial Bank of Commerce, said in a report to investors. “We continue to expect a 25 basis point cut from the Bank of Canada next week.”

Friday’s data marks a “return to normal,”Charles St-Arnaud, chief economist at Alberta Central, said in an email. “It will be interesting to see in next month’s number what impact the extreme volatility caused by the US tariffs will have on the labor market. Nevertheless, today’s release solidifies our view that the Bank of Canada will cut at next week’s meeting.”

What Bloomberg Economics Says

“The weak labor survey just adds to the list of reasons for the Bank of Canada to cut interest rates next week. The steady unemployment rate was facilitated by declining labor force participation and the most interest-sensitive industries are showing a decline in employment. With aggregate hours worked falling, there’s more slack in the economy than the headline employment and unemployment rates would suggest.”

— Stuart Paul, US and Canada economist

Read the full report here.

The manufacturing sector, which led strong job gains in January, shed jobs in February. Transportation and warehousing, another industry that’s involved with international trade, saw some of the biggest job losses that month.

Wholesale and retail trade, finance and real estate, public administration and accommodation and food services added jobs.

Regionally, employment fell in Nova Scotia, all in part-time work, and was little changed in all other provinces.

February’s harsh winter that buried parts of central and eastern Canada under deep snows led to lost work hours in February. Total hours worked fell 1.3% that month, the largest monthly decline since April 2022.

Yearly wage growth for permanent employees accelerated to 4%, versus economist expectations of 3.7% and up from 3.7% in January.

The labor force participation rate decreased by 0.2 percentage points to 65.3%, the first decrease since September.

The Canadian government’s plan to curb immigration has slowed growth in the working-age population in recent months. Last month, the population aged 15 and older grew 47,000, or 0.1%, the slowest since April 2022.

The employment rate — the proportion of working-age population who are employed — was unchanged at 61.1%.

--With assistance from Erik Hertzberg and Carter Johnson.

(Adds more market and economist reaction starting in paragraph six. Earlier updates corrected an economist estimate and added market reaction and US data.)